Auto Insurance Claims: dicey situation..., liability exposure, sales contract

Question
(California) -I let a friend use my car. It was registered to me but not insured. My friend said he was insured, so I let him take it, with the understanding that he would buy it from me when he got the money (I offered him a very generous deal to help him out of a spot) and he paid me in part. Meanwhile, he rear ended someone and the car is probably a total loss.  It turns out that Geico (his company) will pay for the damages, being that the car he was driving had no other insured (besides him).  Here's the thing: my friend says that his insurance carries a $500 deductible, so that after I am paid, he will be out  of pocket that amount.  Because of our pending deal, and other factors, I'm wondering if this is true (about the deductible).  Does this seem likely to you - that he would be expected to pay a large deductible in order for his company to pay off what seems to me to be a liability (or is it "basic collision") claim? or are they somehow considering MY car HIS ? please advise, I hope he's not lying about the deductible. Thanks!

Answer
In some states possession of a vehicle intended for sale places the onus for insurance (at least liability insurance) on the possessor/buyer.

When your friend said he was "insured" does that OR some other vehicle(s)?  If the involved veh was "scheduled" on his policy that would be further proof that the veh was essentially his..

If GEICO is stepping in it sounds like they are handling the liability exposure (damage to the front car) from dollar one (there is NO deductible for liability).  The $500.00 he mentions sounds like a COLLISION deductible and that would be applied to repairs to your vehicle although I am not sure of that at this juncture...

The bottom line is I feel that your friend owes you the FULL agreed to purchase price for the car regardless of whether he's short $500.00 from his company or what.. you appear to have a legally binding and enforceable sales contract...

Let me ask.. who has the TITLE?

Were the terms/conditions of the sale of your car to your friend in writing??

Ask your friend to fully explain what the deal is here and ask him for a copy of his policy Declaration Sheet to include scheduled vehicles.. with that in hand we should be able to sort this all out...

Hope and trust that the above answer(s) your question(s) and provides some direction.

Feel free to get back to me with any additional questions/issues relative to this matter.

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Thanks