Borrowed Car Accidents: Who Pays?
You love borrowing your sister’s sports car. So much faster than your always-reliable, but boring commuter hybrid. She doesn’t need to worry about an accident because you are always careful and have full coverage insurance, right? Except, this time, your history of defensive driving didn’t work out. You are involved in a three-car collision and her sports car is totaled. You might be wondering ‘who pays in a borrowed car accident scenario?’ The simple answer in most states is: let’s hope your sister has an excellent car insurance policy.
There is a popular myth out there that the car insurance attaches to the driver. In fact, the opposite is true. As long the owner of the car has coverage, generally speaking, it will follow the car in most situations. The owner’s car insurance is the primary coverage that would apply if a crash occurred. The driver’s insurance would act as secondary insurance if necessary.
Keep in mind, insurance matters are typically covered by state law, so be sure to check with your local regulations to learn more.
In the above example, if you were the cause of the accident due to negligence or some other reason, your sister’s liability coverage would pay for the other driver’s damage and possibly injuries up to the policy limit. Your sister would file the claim and be responsible for any resulting deductible. If her coverage isn’t enough, that’s where yours might cover the rest (assuming you have insurance).
Let’s start with the first case: excluded person named on the policy gets into an accident in your car. When you initially apply for car insurance, you are asked to list everyone in your household. Some car insurance policies cover every household member, while others may only cover licensed members. Why would a person be excluded from an insurance policy? Perhaps they have a poor driving record or a prior driving under the influence (DUI) conviction and including him or her jacks up your insurance premium rates.
Some states don’t allow for excluded drivers, including Michigan and New York. In most cases, however, if the excluded driver gets into an accident in your car, he or she will become liable for any resulting damages.
In the second scenario, if you take your sister’s car for a joyride without her permission and get into an accident, she likely won’t be held liable for your criminal actions. But remember: if your sister allows you to borrow her car and she is aware you are intoxicated by drugs, alcohol, or a combination of both, she may become liable both civilly and criminally. Also, if your sister knowingly allows an unlicensed driver to take the wheel of her car and that person gets into an accident, she will also likely be held liable.
Car accidents, particularly when you're borrowing another person’s vehicle, can become complicated. While the insurance follows the car, not the driver, there are situations where your own automobile coverage may come into play. Learn more about your options by speaking with an experienced personal injury attorney in your jurisdiction.