When you decide to give a friend the keys to your car, you may not be thinking about the possible consequences that could arise should that friend have a car accident. Even if you were nowhere in the vicinity when the accident occurred, you may likely feel a different kind of impact: a financial one. Of course, much of this depends on who was at fault, the insurance provider, and state laws. Before deciding to lend out a car to anyone, it is essential to think about all the benefits and disadvantages of doing so. On the plus side, you are helping a friend; unfortunately, you will most likely be responsible if they get into an accident while driving your car.
What about My Friend’s Car Insurance?
Although many people believe that the driver’s insurance provider is responsible for expenses incurred from accidents, coverage is provided by the insurance provider that covers the vehicle. Put another way, the vehicle insurance is attached to the vehicle, not the driver, in these cases. So conversely, if you borrowed a friend’s car and had an accident, their auto insurance provider would likely be responsible. Here is a possible scenario regarding what could happen if someone lent their car to a friend who got in an accident while driving it:
Car owner ABC lends her car to friend XYZ. Friend XYZ is driving the car to work and rear-ends a truck stopped at a traffic light, causing damage. ABC must file a claim with her insurance provider and pay the deductible as well as any subsequent rate hikes. Keep in mind that this example is only for a fender-bender without any personal injury. Should the damages exceed ABC’s policy limits, XYZ’s coverage would provide secondary coverage. If the accident was not XYZ’s fault, the claim should be paid by the at-fault driver’s auto policy. ABC’s auto insurance would not be affected, but there would still be plenty of red tape.
Should I Let Other People Drive My Car?
Some auto insurance policies have a permissive use clause written into them. This generally means that other drivers may use the vehicle up to 12 times a year, and damages from collisions will be covered. However, permissive use coverage can be limited. In New Jersey, anyone living in the home with a driver’s license is a covered driver for the car owner’s vehicle.
Before loaning out your car, it is wise to review your auto policy to see what it says about permissive use and covered drivers. Also use some common sense. If your friend has a poor driving record or has been known to drink and drive, it is better to turn them down. Even if they become angry, if the chances of an accident are too high, it is just not a good idea. An accident could also ruin a friendship.
Besides all of that, if your friend seriously damages your car or totals it, how will you be able to get around? These days it can take weeks or months to repair a vehicle, and unless you borrow one from another friend, you can find yourself with a real problem. Another important thing to consider is that you could be sued for letting an impaired or intoxicated person drive your vehicle; car owners have also faced lawsuits for letting unlicensed drivers take their cars. Also, if you do let a friend borrow your car, make sure that they have full auto insurance coverage, because that kind of situation could also lead to getting sued.
Are There Any Kinds of Exceptions?
There are exceptions, but these are not common. In some cases, auto owners exclude certain drivers from their policies. A parent whose teenager has repeatedly had accidents might remove that teen from the policy, so if that teen took the car without permission and had an accident, the car owner’s policy would not pay for the damages. Of course, people will take cars without permission, but this can be very hard to prove in court. However, if the car was stolen, the car owner should not be held liable for any injuries or damage that happen to another person or vehicle. These kinds of situations can fall into gray areas when a driver who caused an accident claims that they had permission even if they did not.
Oftentimes there are claims such as those in which the driver’s policy pays first, and the owner’s will be the secondary coverage, but these are less common and depend on specific circumstances. In most cases, when the person who borrowed the car is found to be legally at fault, the car owner’s auto insurance provider will pay.
What Should I Know about New Jersey Auto Coverage Laws?
Like all states, New Jersey requires its drivers to have auto insurance coverage, but the type and amount vary. At the minimum, the basic New Jersey auto policy costs less, and liability coverages can be increased with standard policies. The good thing about standard policies is that they provide more coverage while you are driving and additional coverage when another driver is involved in accidents when driving your car, for example, permissive use.
A basic policy does not include bodily injury liability, which is coverage when people are injured by an accident that you caused; standard policies range from $15,000 per person/$30,000 per accident to $250,000 per person/$500,000 per accident. Basic policies do provide $5,000 of property damage liability for damage that you cause, whereas standard policies can offer up to $100,000. Personal injury protection (PIP) is also part of the basic policy, with $15,000 per person/accident that can go up to $250,000 for serious injuries such as brain and spinal cord injuries and disfigurement. Standard policies can have similar coverage for PIP.
What about Other Coverage?
Basic policies do not provide uninsured/underinsured motorist coverage, which is available with standard policies. This coverage kicks in when you are involved in accidents caused by uninsured motorists. Collision and comprehensive are optional for both kinds of policies. Collision is when the vehicle collides with another vehicle or object, and comprehensive coverage includes other kinds of damage that is not from collisions, such as broken windshields, theft, and vandalism.
Some New Jersey auto policies also offer options to sue other drivers who are at fault for causing accidents that lead to injuries and property damage. A limited right to sue is available with basic policies and allows policy holders the right to sue when there are major injuries or deaths. An unlimited right to sue will be more expensive but comes with additional options for suing. To protect yourself, your vehicle, and your finances, keep the following in mind:
- Be sure that your liability coverage is up to date, and if you do not already have it, think about adding collision coverage. Contact your agent to understand your options.
- Do not let unlicensed or uninsured drivers operate your car.
- If you lend out your car, make sure to know where the person is going and when they will return. The longer they have it, the higher the chances are for getting into an accident, even if it is not their fault.
Monmouth County Car Accident Lawyers at Ellis Law are Highly Skilled in Dealing with All Kinds of Car Accidents
You might believe you are doing a friend a favor by lending out your car, but this kindness comes with a considerable amount of risk. If you need help dealing with an accident that occurred while someone else was driving, reach out to the trusted Monmouth County car accident lawyers at Ellis Law. We will thoroughly investigate the accident and will fight to protect your rights. For a free consultation, call us at 732-308-0200 or complete our online form. We are located in Freehold, New Jersey, and help clients throughout Freehold, East Brunswick, Toms River, Middletown, Jersey City, Neptune, Hudson County, Union County, Essex County, Monmouth County, Marlboro, and Ocean County, as well as Brooklyn, New York, and New York City.