Auto Liability: When your Friend Crashes your Car

LiabilityYou let your friend or family member borrow your car. Most of us have done it, probably even recently. Problem is, this time they got in an accident.

So where does that put you?

In terms of insurance, the answer is most often: at fault. To better help you understand the ins and outs of auto liability as it applies when a friend crashes your car, we’ve documented what will likely happen in a few of the most common scenarios.

Friend is at Fault for the Accident

Your Friend is Insured

Although your friend is insured to drive his own car, the primary insurance follows the car not the driver. This means your insurance will act as primary coverage for damages. This includes damages to your vehicle and any other property or persons who may be involved in the accident.

If the accident produces significant damages that exceed your policy limits, your friend’s insurance may act as a secondary insurance to cover additional costs up to his predefined coverage amount.

The Takeaway: If your car is involved in an accident, you should expect to see an increase in your premium.

Your Friend is not Insured

Your personal auto insurance will cover the damages incurred from your friend’s accident. If liability costs exceed your insurance limits, then both you and your friend can expect to be held personally liable for the excess.

The Takeaway: Do not allow uninsured drivers to borrow your car unless you are prepared to cover damages that exceed your policy limits.

When Permission to Drive was Not Given

If your car was crashed by someone who stole your vehicle, your insurance would most likely cover damages to your vehicle, but would not be liable for any damage incurred to other property or persons.

Things get a little trickier when a friend or family member takes your car without permission. Unless you have expressly denied them permission to take the vehicle, your personal insurance may assume permission was granted and most likely cover damages.

The Takeaway: If you have a friend or family member you fear may take your vehicle without asking (for which you would not want to provide coverage for in case of an accident), make sure to specifically exclude them in your policy.

 Friend is Not at Fault for the Accident

At Fault Driver is Insured

Just as if you were the driver, when not at fault, the damages to your vehicle, driver and passengers will be covered by the insurance of the driver at fault.

The Takeaway: Drive defensively.

At Fault Driver is Not Insured

Even though auto insurance is required by law, it is estimated that one in seven drivers remains uninsured. If your friend is hit in your car by an uninsured motorist, you must personally seek damages through the court system to account for damage to your vehicle.

What about the physical damage to my car that was borrowed?

The Takeaway: Make sure you have uninsured/underinsured motorist coverage. Whether it’s you or your friend who gets hurt in an accident, this coverage will be there when monetary assistance from the at-fault, uninsured motorist will most likely not.

 Before Lending Out Your Car

  • Confirm your friend or family member has a valid driver’s license.
  • Check to make sure your insurance information and car registration are in the vehicle.
  • Understand your personal auto policy. If you’re unsure of coverage, contact your insurance representative and ask any questions you may have.
  • Find out if your friend has their own car insurance.
  • Know you will be liable for any parking tickets incurred during the period your friend has the vehicle. Parking tickets are connected with the vehicle, not the driver so you’d be liable for any fees of that nature.