Is it a bad idea to loan my neighbor my truck?

Only you can decide whether to trust your neighbor to handle your truck responsibly. As for car insurance, your policy would provide coverage if your neighbor borrowed the truck and got into an accident.

A standard auto insurance policy covers the policyholder and anyone else who uses the car with the owner's permission. If your neighbor caused an accident with minor damage, your policy would pay and you would owe the deductible.

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For a more serious collision, your insurer and your neighbor's insurance company could share the costs proportionately in what's known as "pro rata." Even then, your insurance would likely pay the full cost of the accident first and then would seek compensation from your neighbor's insurer.

The issue would get more complicated if your neighbor caused a serious accident that exceeded your policy's liability limits. In that case, your insurance would generally pay out first and the neighbor's car insurance would kick in as secondary coverage.

If your neighbor has no car insurance, then you could be on the hook for paying the damage that exceeds your liability limits. Car insurance won't pay beyond the limits stated on the policy.

For more, see when your friend crashes your car: the rules of auto liability.