For Economic reasons, a friend wants me to purchase their car, but allow them to remain the primary driver.
Can someone help me with the insurance/liability issues this may cause?
I can put the car under my policy, no problem. But what liability does that NOT cover for this other person not driving?
Does auto insurance cover the liability for anything the car is responsible for, or does the insurance cover the Person?
Right now, they have insurance, but also for economic reasons, they want to cancel that.
Example
My car, with insurance. The driver is a friend without insurance. Friend is driving and gets into an accident. What am I, as the car owner liable for? (just assume normal collision, deductible and uninsured motorist on my policy)
And...what is this person does have some sort of policy that covers them driving, just not a specific vehicle?
I would have them purchase a policy and have them exclude you from it.
The reason that I would not recommend you use you policy is that unless he is part of your policy he will not be covered or coverages will be reduced when he is driving.
You really need to talk to an attorney. They can give you several reasons not to do it. For example they hit and kill someone. You owned the car and will be involved in the lawsuit.
Can you do it yes. Buy the car, Title and Register it and list him/her as a driver. You may also go as far as listeing them as a named additional insured. Warning it is just like a marriege now they have all rights as you do on the policy, so in six months you want to remove them they have to sign off to be deleted.
Again there are so many reasons not to do this. Heck if you want to help them out just give them the money up front at least it is a known how much you are going to lose.
What state are you in? The state insurance regulations are more likely to determine it than anything else, an attorney might not be much help. Why do they need to be the primary driver? You should just by your friends car and put them on the policy if you're going to be living together (which you may or may not). Usually whoever is driving the car will be at fault for the accident but if they don't have any insurance then whoever has the car insured will be the one who will have their insurance pay for it. If your friend was in an accident the policy should cover them, but they might get upset if the friend wasn't listed on the policy. In that scenario it would probably raise your insurance rates too even though you weren't the one driving.
You really need to talk to an attorney. They can give you several reasons not to do it. For example they hit and kill someone. You owned the car and will be involved in the lawsuit.
Can you do it yes. Buy the car, Title and Register it and list him/her as a driver. You may also go as far as listeing them as a named additional insured. Warning it is just like a marriege now they have all rights as you do on the policy, so in six months you want to remove them they have to sign off to be deleted.
Again there are so many reasons not to do this. Heck if you want to help them out just give them the money up front at least it is a known how much you are going to lose.
I'd listen to this guy. Especially the third paragraph.
You want to risk your entire financial future on your friend who seemingly can't afford to own a car? Car insurance rates are based on credit scores now as people with poor credit tend to be poor risks. I don't know if your friend is a poor credit risk but if he needs you to buy him a car that might be a clue he has trouble managing credit.
I doesn't matter what the insurance laws say, if your friend has an accident in the car titled in your name you will be brought into the lawsuit. Give your friend the cash if you must.
Thanks everyone for the replies. It is an unusual situation and its for a friend of my wife, so I gotta ask the questions! My own opinion is not always good enough!!
I'm not sure there's liability on your end if he gets into an accident just because you own the car as long as he's an eligible driver on your policy.
If my wife downs a six pack and runs over nuns crossing the street that's on her. No one can come after me just because I own the car.
Here's the risk; if you find a way to get him onto your policy and he gets into an accident your rates could go up or your policy could get canceled. That's more risk than I'm willing to take for a friend.
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If my wife downs a six pack and runs over nuns crossing the street that's on her. No one can come after me just because I own the car.
We even have attorneys on this board. I didn't know. And our attorneys better have massive amounts of E&O insurance if they are giving really bad advice.
I'm obviously talking about charges being filed. If I'm driving drunk and cause an accident that's on me. I'm not sure but I'll check to see if my wife would be in any legal hot water - doubtful.
I'm not exactly sure how that would play out: "Lisa? Your husband just caused an accident. Turn around and put your hands behind your back."
Now, if as a result of the accident I caused the victim comes after me through a civil proceeding that obviously affects my wife since assets are joint.
I'm obviously talking about charges being filed. If I'm driving drunk and cause an accident that's on me. I'm not sure but I'll check to see if my wife would be in any legal hot water - doubtful.
I'm not exactly sure how that would play out: "Lisa? Your husband just caused an accident. Turn around and put your hands behind your back."
Now, if as a result of the accident I caused the victim comes after me through a civil proceeding that obviously affects my wife since assets are joint.
We aren't talking about criminal charges. Your car insurance won't provide you any criminal defense if you are charged with a crime like negligent homicide or vehicular manslaughter.
This discussion is about liability claims. If you lend someone your car and they kill someone you can bet you will be named in the lawsuit. Heck, if you lend someone your car and they cause a fenderbender you will be liable as the vehicle is yours.
Not sure how every state works, but in Minnesota, the insurance follows the VEHICLE, not the driver. So as long as the vehicle has coverage and you give the driver permission to operate it, there is coverage. However, there could be legal ramifications that come back to you as the owner and the insurance policy holder even though you were not the one operating the vehicle....
We aren't talking about criminal charges. Your car insurance won't provide you any criminal defense if you are charged with a crime like negligent homicide or vehicular manslaughter.
This discussion is about liability claims. If you lend someone your car and they kill someone you can bet you will be named in the lawsuit. Heck, if you lend someone your car and they cause a fenderbender you will be liable as the vehicle is yours.
Ok, so I called my bro about this (attorney for 30+ years.)
Say I lent my car to my best friend. He's indeed covered under my insurance while in the car. Now, say he hits and kills someone.
First of all, anyone can sue anyone. Let's get that out of the way. The family of the person my friend killed can name me if they want but they have to show contributory negligence on my part to win an award.
A) I lend my friend the car after he had too many drinks
B) I have knowledge (that can be proven) that my friend is a reckless driver. Maybe I know he caused 3 accidents last year
C) etc...
Their attorney will try their best to show that you should have never lent him your car but the burden of proof is on them, not you. They'd have to convince a jury that "no reasonable person" would have lent your friend the car.
However, absent of that - say my friend's a good citizen, good driver and I had no knowledge that lending him the car could result in an accident they would not get an award from me.
say my friend's a good citizen, good driver and I had no knowledge that lending him the car could result in an accident they would not get an award from me.
Would your brother put that in writing? I get calls once in a while from customers and they ask me if they should let their friend drive their car for whatever reason. I always explain that my customer is risking his financial security for his friend if he does.
If I had a letter guarenteeing my customers wouldn't wouldn't lose in a lawsuit if something happened it would be a much easier conversation. I'll even pay for his letterhead.
Anyone can sue anyone. I can't imagine that if someone filed a totally frivolous lawsuit any attorney would put in writing that you have nothing to worry about.
I led my friend my car. To my knowledge he's a good driver. He gets in an accident and causes damage and I'm named in the suit.
Fine, but my point is they're only getting an award from me if they can prove that the act of me lending him the car was negligent.
But...I agree with you. Want to avoid all of that hassle? Don't lend anyone your car.
I'd write up an agreement and have him get his own insurance. You can be named in a lawsuit, unlikely it will get far, unless it can be shown that you contributed to the accident.
This discussion is more in play when you have a minor driving, where the parents are still responsible. As adults, hopefully we can be responsible for ourselves, and if not, the government will take care of us.
The answers may be different with your company but for the company I work for these are the answers.
I can put the car under my policy, no problem. But what liability does that NOT cover for this other person not driving?
To insure a car on your policy the car needs to be in either you or your spouses name. Unless you have a purchase agreement and the title will be switched to your name at some point. For example you would be paying their loan payments and when the car is paid for the title will be switched to your name.
Does auto insurance cover the liability for anything the car is responsible for, or does the insurance cover the Person? The coverage on your car covers anyone who is driving your vehicle (if you loaned it on occasion). However, if someone is considered a regular operator then they would need to be rated on your policy( usually a member of your household that has regular access to the vehicle).
Right now, they have insurance, but also for economic reasons, they want to cancel that. Due to the economy it is very common for people to call in saying they want to insure someone else's vehicle. Under this circumstance it is possible to insure another persons vehicle but the person who owns the vehicle still needs to rated as a driver since they have ownership. This is normally a situation when someone is taking over payments.
Example
My car, with insurance. The driver is a friend without insurance. Friend is driving and gets into an accident. What am I, as the car owner liable for? (just assume normal collision, deductible and uninsured motorist on my policy) The claim would be covered under your policy and you could be held liable for anything above and beyond your policy limits.
And...what is this person does have some sort of policy that covers them driving, just not a specific vehicle? This is called a Named Non Owner or NNO policy and most states they are not offered. The ones that do offer them usually don't offer them to someone who will be driving another persons vehicle on a regular basis and it is liabilty only no comp or collision.
Last edited by JasonH : 11-17-2009 at 08:07 PM.
Reason: added
Buying Car-non Relative Driving
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