In which situation would your policy provide coverage if an accident occurred?

The correct choice highlights a scenario where coverage is likely to apply due to the specifics of the situation. When a taxi driver friend borrows your vehicle with your permission, the key element is the permission aspect. Most insurance policies include provisions that cover the vehicle when it is used by someone who has explicit permission from the owner. This is essential in determining whether coverage will be extended in the event of an accident.

In this context, having the permission means your insurance company will recognize the driver as an authorized user, which typically enables the policy benefits to activate in the event of a claim. This is a critical factor, as unauthorized use can lead to complications in coverage.

The other scenarios express various reasons why coverage might not apply. For instance, the first option involves a borrowed vehicle for personal use, but it doesn't make clear whether permission was granted; therefore, it could create uncertainty in coverage. The situation involving a relative driving without permission outright negates the possibility of coverage, as unauthorized use is not typically covered by insurance policies. Lastly, while having a licensed driver using your vehicle might seem to imply coverage, it depends heavily on whether that person has the owner's permission to operate the vehicle. Without that explicit permission, coverage could also be contested.

In summary,