Assume I let someone who is not on my insurance borrow my car (which I am financing) and they crash it into another car. Who’s insurance covers the damage to each car or if insurance is lacking who sues whom. Consider 3 scenerios:
I have insurance and the driver has liability.
I have insurance the driver does not.
Neither one of us has insurance and yes I know that that violate my finance agreement bit we assume the finance company does not know I’m insuranceless yet.
I know you mean in the USA but I thought some might be interested in what would happen in the UK:
All cars that are not registered as being off the road, even if they actually are in a garage etc. have to be insured.
Most private car insurance specifies a named driver or drivers, but many allow a driver with insurance on his own car to drive another (insured) car. So in that case the answer to (1) above is that the driver’s insurance would be liable.
For (2) The driver would be liable personally. He would also probably be prosecuted, and so would you for letting him drive it uninsured.
For (3) As above, but you would both end up in front of a magistrate and get six points on your licences (half way to disqualification) and a hefty fine.
If the police attended the accident, they have the power to tow any car who’s driver is not insured to drive it. This is very costly and may people simply abandon the car.
Almost (all?) auto insurance policies in this country cover you (the insured) while driving your car and any other car you drive. It also covers other drivers you allow to drive your car.
If the driver you permit also has insurance, each state decides which insurance company pays differently. In my state, the owner’s policy is primary with the driver’s policy making up the difference.
So #1) In my state, your insurance would pay. If you didn’t have enough coverage to pay for all of the damages, the driver’s policy would pick up the rest of the damages.
Your insurance would pay.
The other motorist’s uninsured coverage would pay, but that insurance could sue the driver for the balance. Depending on how trustworthy the driver was (he has 11 DUIs for example) you could be sued for “negligent entrustment” for permitting such a scofflaw to drive your vehicle.
For #3, what if the other driver (stupidly IMO) doesn’t have Uninsured Motorist? Sue the driver?
Yes. And at least in this state, the whole “I’m judgment proof” argument is a very bad thing for the uninsured driver. The law here requires a minimum of $20k in liability insurance to drive (very low). If a driver is uninsured, causes damage, and gets a judgment entered against him, the driver loses his drivers license until he pays out of pocket:
It’s very bad all around to drive without insurance.
[QUOTE=bob++]
For (2) The driver would be liable personally. He would also probably be prosecuted, and so would you for letting him drive it uninsured.
[/QUOTE]
I disagree. The driver is not uninsured. He is insured by the OP’s policy. Imagine I have a driver’s license, but don’t own any cars. If you let me drive your car, I don’t go out and buy a policy; hell, nobody would sell me one without a car to attach it to.
I would be covered by your policy while I am driving your car, and be legal.
The question is - is the insurance on the car or the driver(s) where you live?
I’ve seen both situations -
If you let someone drive knowing the have no license or insurance, you too are liable.
IIRC many years ago, never bothered to see if it had changed, insurance was on the car. There was a famous case (IIRC went to Canadian Supreme Court?) many years ago, where the mechanics at the gas station took a car for the weekend after fixing it, and injured or killed someone. The owner - and his insurer were deemed liable - as owners of the car that did the damage. The mechanics had not stolen the car, the arguments revolved around whether they had permission to use it, that this was a common thing, etc.
The other issue was “borrow” vs. habitual use. A person who lives in the same household should be listed on the list of allowable drivers and their record will be taken into account when assessing insurance charges. Your uncle from out of town is obviously only an occasional driver.
One province I heard of has government car insurance, and if you are a poor driver but do not have a car insured, your license will cost you hundreds or thousands of dollars instead; so the first line of insurance is on the car, but failing that, there is insurance on your driver’s license.
In Ontario, when I needed it a while ago, there was an option with at least the one insurance company, for example, to add car rental coverage - covered the whole year for a lot less than the fees car rental companies charge for a week.
Depends on your state and insurance policy. In California insurance follows the car. So if your friend hits someone your insurance would be primary and if your insurance runs out then theirs kicks in.
If your policy has a drop back clause then your liability drops back to state minimum requirements.
Plus, in the case of insurance following the car, an insurance company may be liable to your victims, but then come after whoever other than you caused the accident for reimbursement? I seem to recall something about that.
I am in the UK.
Insurance on private cars (as opposed to companies) is almost always for named drivers only. My Policy covers Bob++ and Mrs Bob++ and no one else. If my daughter wanted to borrow it, she would be covered by the policy on her own car, but for 3rd party liability only. So unless we could claim off the other driver, we would have to cover our own costs.
If my neighbour, who doesn’t have a car, wants to borrow it - I would have to pay to have him added to my policy. If he is under 25, or has a bad history, that might cost more than the car is worth.
So it sounds like as a general rule (YMMV) my car = my insurance even if I’m not driving.
I thought that for comprehensive and collision but not for liability to. This is why I use the Dope.
Yeah, I’m pretty sure the insurance follows the car, not the driver. So, if you let your friend borrow your car and he crashes it, your insurance will have to pay for the damages.
I really don’t think this is correct. If it were, you wouldn’t have to insurance your children when they become licensed drivers if they don’t have a car. Maybe this is a state/country/insurance company thing. All I know is that I had to add my husband to my car even though he has his own insurance on his car or I would not be covered if he was at fault in any damage to my car. His insurance would cover who or what he hit but not my car. When my son got his license, he had to be added to our insurance even though he didn’t have a car in order for our cars and any damage he did to be covered.
The “anyone who drives your car” clause is meant to cover casual or infrequent drivers of your vehicle like friends and neighbors. If it is someone who regularly drives your vehicle, like your husband or another licensed driver in your household who you swear will never, ever only a little drive it, like your teenaged son, then the insurance company insists that those people be added as named drivers so that your premiums can be adjusted accordingly (read: upwards).
So liability does not protect me when a car I’m driving hits someone. It covers the liability my car has when someone driving it hits someone? Or in other words when I lend someone my car, I’m taking responsibility for what they do when driving? Interesting.
Is that a general (true in 49 states and DC) rule or a YMMV depending on state?
Yes it does. Your liability insurance protects you when driving any vehicle. It also protects anyone driving YOUR vehicle(s). This is a general US rule.
What varies by state is which policy coverage kicks in first. Say I drive a Honda and I have State Farm insurance. You have a Ford Pickup Truck with Allstate.
I need to pick something up at the hardware store, so you, being the nice person you are, let me borrow your truck. I hit a bus full of girl scouts doing $150k worth of damage.
Two insurance policies are in play: My State Farm which covers me in any vehicle I drive, and your Allstate which covers any permitted driver of your vehicle. Without guidance, each company will demand that the other pay.
In my state, YOUR policy would kick in first. Say you have $100k limit on your policy. Your policy would pay $100k, and then my policy would pay the remaining $50k.
Other states flip that and would make my policy pay first. Still other states split everything 50/50.
But universally in the US, insurance covers BOTH the car and the driver.
Legal advice is best suited to IMHO.
Colibri
General Questions Moderator
I said that inarticulately. First point: cars are not liable for anything. Owners of cars are not liable for anything. (Except possibly negligent entrustment discussed above; family purpose doctrine-see law school; anything else some Plaintiff’s lawyer wants to try; but as a general rule owners of cars are not liable for someone else’s accident).
Only a driver who commits an act of negligence and causes damage to another is liable. So auto insurance technically only covers a driver. But in the case we are talking about there are two different policies covering the driver and the law sets forth which policy must pay first.
I suspect that a lot of this was specific to your situation - I think most married couples with multiple cars insure them on the same policy as there is usually a discount. My husband and I have a joint policy, and when my son got a license he was only added to my husband’s car as an occasional driver,not mine. Which was fine- because he was never going to drive the two-year old car. He could drive the twelve-year old one or he could take the bus.He now has his own car,and his own policy and isn’t on ours at all even though he’s still in the household.
Basically, what it come down to is that the insurance company is unwilling to believe that there is a licensed driver in your household who doesn’t have a car of his own who is going to borrow your car as infrequently as the neighbor. It’s not feasible to factor in all the neighbors or relatives who might borrow your car one day when setting your rate, but they can factor in a member of your household. Or you can have that household member excluded by name- but then he’s not covered ever. You could have done the same with your husband- but again, he wouldn’t be covered ever. It would be very inconvenient if my husband couldn’t drive my car but YMMV.
Be careful when you have an excluded driver on your policy. You can literally have anyone in the entire world but that person who’s excluded on your policy drive your car. It doesn’t matter who’s at-fault. If there’s someone excluded your insurance company will not pay out on the policy.
Randmcnally-auto insurance adjuster.