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February 2015 Archives

What happens when you lend your car to someone and they cause an accident?

What happens when you lend your car to someone and they cause an accident? Does your insurance cover that? Are you liable since you're the owner of the car?
Answer:
The person you lend your insured car to is considered a "permissive user." It is as if anyone else in your household is behind the wheel.
What people are always confused about is Personal liability for driving a car as opposed to simply your insurance company policy.
If you are driving a car and you cause an accident, you are personally responsible. Your insurance company will have the obligation to provide you with a defense, give you a defense attorney, but all they will have to pay is the amount of liability insurance you bought. After that, if the damages are more than your insurance, you have personal exposure, which means that the injured party can get a judgment against you, personally and seize your assets.
That's why we always tell people that if you have assets you want to protect, get more than the minimum $15k liability insurance that you need to be legal on the streets of Louisiana.
But if someone else is driving your car, with your permission, or you leave your keys around and make it a habit of making your car available to someone, and they borrow your car and cause an accident, they are personally liable, and so is your insurance company, but rarely would the owner be liable. For the owner of a vehicle to be liable when someone else was driving, the owner would have to have been guilty of something called, "negligent entrustment." That means you should have known that you were lending your car to someone who was not qualified or competent to drive, and you did it anyway. That's rare. Usually, only the driver is personally liable, when driving the car with permission, and the insurance company, but not the owner.
Remember, that if you give someone permission to use your car, some cases have held that if that person you lent your car to, in turn, lends it to someone else, and that 3rd person causes an accident, it's just as if you lent the car directly to that 3rd person, and your insurance will have to pay - but again, not you personally. 

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