A situation may arise in which you lend your vehicle to a family member, neighbor, friend or roommate. While you may agree to lend your vehicle to someone else, you likely do not anticipate that you will be legally liable for their actions. However, situations exist in which your insurance coverage will be utilized for a claim or in which you are legally liable for damages that result from this third party’s actions.
Car Insurance Basics
Whether your car insurance will cover the damages depends on the provisions contained in your policy as well as the circumstances involving the accident. Policies vary, but a general rule is that anyone living in your house is covered by your insurance when driving your vehicle. An exception is if a person in the household is specifically excluded. Some insurance companies require everyone in the household to be listed on the insurance.
Additionally, drivers who you give permission to drive your vehicle are usually covered by your insurance if they are in an accident. This is because car insurance usually follows the vehicle, not the driver. This is true in most states of comprehensive and collision coverage. Your own insurance is the primary coverage that is used if someone driving it is in an accident. If necessary, the driver’s own vehicle insurance would serve as secondary insurance in case the damages exceed your policy limits. In some states, permissive drivers are covered by your insurance policy but at a reduced amount.
Fault
As usual, an inquiry will be made into who was responsible for the accident. If the person you lent it to was not at fault, the other driver’s coverage would pay the claim and your insurance would not be affected.
Policy Information
If a friend or other person is at fault for the accident, carefully read over your policy. Note any policy exclusions. If someone excluded caused the accident, your coverage will not pay for the damages and you will be responsible. The policy should also contain information about making a claim. If someone did not have your permission to drive the vehicle, such as if the vehicle is stolen, you may not be liable for damages. However, it may be difficult for you to prove that you did not give permission to someone to drive the vehicle. In some cases, the driver’s insurance will be the primary insurance and yours will be the secondary, such as when a friend drives the vehicle without your permission. Most car insurance companies will assume that you did provide permission to the driver to use your vehicle if it was someone you know such as a friend, family member or neighbor.
Negligent Entrustment
You may face additional liability if you are found to have negligently entrusted your vehicle to someone. This legal claim arises when a person entrusts a dangerous instrumentality, including a vehicle, to another person, knowing that that individual is incompetent, reckless, unfit or inexperienced. The plaintiff in such a case has the burden of proving that the owner of the vehicle knew or should have known that the driver was incompetent at the time that the owner gave the driver permission to drive the vehicle.
For example, such a claim may arise when a parent lets his or her minor who only has a learner’s permit drive the vehicle without permission. This legal claim can also arise if the owner allows an intoxicated driver, unlicensed or a driver with a prior history of reckless driving. An elderly or ill person may also be unsuitable and incompetent to drive due to health reasons.
Claim Filing
Once you have a better understanding of where you may fall on the liability spectrum, you will be in a better position to know how to respond. To be safe, you should file a claim with your insurance company immediately after the accident. Some policies allow for a denial if a claim is not filed soon after an accident. Additionally, get the driver's insurance information in case you also need to file a claim with it or your insurance company can later pursue reimbursement for damages.
Legal Assistance
If you believe that you may be found liable for an accident including for negligent entrustment, consider talking to a personal injury lawyer about your legal rights and responsibilities.
