Who May Be Liable for an Accident Involving a Borrowed Car?
Legally Reviewed and Edited by: Terry Cochran
It’s common for people to borrow cars, especially from close friends or members of the same household. At times, you may need to lend your car to your wife or children so they can go out or a co-worker who needs to run an errand for you.
However, you may not appreciate the potential liabilities of lending a car to someone who has an accident. Although you might think the person driving the vehicle is responsible, the owner of the car is liable in many cases. If you lend your car to someone involved in an accident, you may need to seek legal advice.
An experienced car accident lawyer at the law firm Cochran, Kroll & Associates, P.C. can handle your case and guide you through this complex area of law. A free case evaluation can help you understand your rights and whether you are liable for damages.
Does the No-Fault Insurance Law Cover Me?
From July 1, 2021, changes were made to the Michigan no-fault insurance law. These changes focused on the Personal Injury Protection (PIP) part of your auto insurance premium.
Previously, Michigan drivers had to carry unlimited medical coverage for injuries sustained in a car accident. To combat increasingly high levels of premiums, the new Auto Insurance Law was passed.
The new law allows you to choose the level of PIP coverage that fits your budget. You can choose to have unlimited coverage, a lower level of coverage, or waive PIP benefits altogether. However, you must be aware the insurance company will only pay up to the level of cover you select if you are injured or injure someone else in an accident.
Does My Insurance Cover the Damages?
To understand who is liable, the general rule is that auto insurance follows the vehicle. If someone borrows your car and is involved in a car accident where they are the at-fault driver, your insurance company would provide the primary coverage for the damages.
If your PIP insurance doesn’t sufficiently cover all medical expenses incurred, the injured party may file another claim against you.
What if My Insurance Doesn’t Cover All the Losses?
When a person is injured in a car accident in Michigan, they may file two types of claims. The first is the no-fault PIP benefits claim, which may be limited by the amount you’ve selected on your policy. If the damages exceed the maximum coverage on your policy, you could be liable for the remaining medical expenses and lost wages.
In this case, the injured party may file a second claim called a bodily injury liability claim to cover the damages exceeding your PIP insurance coverage. Michigan law requires drivers to have a bodily injury liability insurance policy of up to $250,000 for one person being hurt or killed and up to $500,000 for two or more victims. Your bodily injury liability insurance should cover the rest of the injured person’s expenses if they file this claim.
Who is Covered?
One of the most important questions involving an auto accident with borrowed vehicles is authorization to drive. This helps to determine liability.
Car owners can add authorized drivers to their auto insurance policies, and these drivers will be covered in the case of an accident. Typically, these are members of the policyholder’s family or household.
If an authorized driver on the insurance policy is driving the vehicle at the time of the accident, the insurance company should pay for any personal injury or property damage.
What if I Didn’t Give Permission to Borrow My Car?
If you have forbidden someone from driving your car or named them an excluded driver on the policy, the situation is different. In that case, any liability arising from a crash may be treated in the same way as accidents involving stolen vehicles.
Two recent Michigan Supreme Court decisions have clarified the legal position in these situations. In both these cases, the driver took the car without the owner’s permission and suffered injuries in the car crash. In both accident cases, the Supreme Court ruled the drivers were not entitled to medical benefits as the vehicle had been taken unlawfully.
Does Negligent Entrustment Affect Me?
Michigan State law allows claims under the common-law tort of negligent
entrustment. It is generally understood that if you lend a vehicle to someone, they are fit to manage the vehicle on the road and not endanger themselves or anyone else. That is why there are laws to prevent the loaning of cars to persons not fit or competent to drive a borrowed vehicle.
Negligent entrustment claims can arise if you allow another person to drive your vehicle who is:
- Under the influence of drink or drugs
- Has a history of negligent driving
Call us today at Cochran, Kroll & Associates, P.C. if you have any questions about your situation or require more information about liability for an accident involving a borrowed car. You can contact our law firm at 1-866-MICHLAW (866-MICH-LAW) to arrange a no-obligation, free consultation.
Disclaimer : The information provided is general and not for legal advice. The blogs are not intended to provide legal counsel and no attorney-client relationship is created nor intended.