Most of us have loaned our car out at some point. Sometimes, we loan our cars to family members. In other cases, our friends may need a vehicle to get across town and back. Regardless of who you learn your vehicle to, it is important to understand what happens if someone else crashes your car. Will you ultimately be held liable for any injuries and property damage that occurs?
Who Does the Insurance Travel With – The Person or the Car?
When people obtain insurance, they usually think that the insurance follows them no matter What Car there and, but the reality is that auto insurance typically follows the vehicle, not the driver. If you loan your car out to a friend or family member, and they subsequently get into an accident, it is your insurance policy that will typically be responsible for paying for the claim, depending on the coverages you have in the policy.
This means that the claim would go onto your insurance record, and could certainly affect your insurance premiums moving forward. However, there are several factors that go into determining which insurance will pay for a claim after an accident occurs in a car that you loaned out.
Michigan is a no-fault state when it comes to auto insurance, which means every individual is required to carry a certain amount of personal injury protection (PIP) insurance that they can turn to regardless of who caused the accident. Injury victims will typically only be allowed to pursue compensation against an at-fault driver if they have suffered severe injuries that meet certain thresholds.
If the person you loaned the vehicle to does cause the accident, there are some factors that still need to be examined. There could be shared liability, which, under the state’s modified comparative negligence system, could alter how much compensation your insurance carrier has to pay to other parties involved. Again, examining the no-fault system in this state, we have to take into account that the claim may actually never reach your insurance carrier, depending on the severity of the incident.
However, your insurance may be used to pay for the injuries to the person who borrowed your vehicle, so keep that in mind when deciding whether or not to loan your car out.
What if the Damages Rise Above the Policy Limits?
There are times when an accident could lead to injury and property damage expenses that rise above the limits of your policy. When this happens, the injury victims may be able to tap into the insurance policy of the person who borrowed your car. For example, if your insurance covers $20,000 in injury expenses for another party, but they sustained $30,000 worth of medical bills, then the insurance carrier of the person who borrowed the vehicle may be on the line for the additional $10,000.
In the event the person who borrowed the car does not have auto insurance, the vehicle owner may be on the line if the injury victim files a personal injury lawsuit against them. This could result in the vehicle owner having to pay compensation out of their own assets, depending on the outcome of the case.
Working With an Attorney
If you loan your car out to someone else and they subsequently cause an accident, you may need to work with an attorney as soon as possible. If it looks like the other party’s injuries were severe and that it may end up resulting in a claim against your insurance carrier, let a Southfield accident attorney examine the situation and help determine the best steps moving forward.