If I loan my car to someone and they get in an accident, will my insurance have to pay?

You’re a generous person—you can’t help it. If a friend or family member needs help, you’re happy to provide it—even if they ask to borrow your car. But what happens if your friend gets in an accident while they are driving your car? Will your insurance cover repairs and injuries if you weren’t driving the car? And what if your friend causes a crash and an injured person sues them for damages? Our New Mexico car accident team answers these questions here.

Most Types of Insurance Follow the Car

Friend Borrowing Another Friends Car KeysIn New Mexico—and most everywhere else—car insurance policies cover the car, not the person who bought the policy. This holds true for the following types of coverage:

  • Bodily injury liability. In New Mexico, you are required to carry bodily injury liability coverage of a minimum of $25,000 per person and $50,000 per accident. If someone else crashes your car, injured parties will be covered by this insurance.
  • Property damage liability. You are also required to carry a minimum of $10,000 in property damage liability. Again, this covers damage to other cars caused by the driver of the insured car.
  • Collision coverage. If you have opted for collision coverage as a part of your policy, then any damage sustained by your vehicle will be covered by your insurance, even if you were not the one driving at the time of the crash.
  • Comprehensive coverage. This kind of insurance covers damage done to your vehicle by weather, theft, vandalism—any non-collision-related cause—even if the car was being borrowed by someone else at the time.

While it could be a relief to know that your insurance will kick in even if someone else is driving, keep in mind that the claim goes on your insurance record and could affect your rates later on. It doesn’t matter to the insurance company that you were not in the car at the time of the crash.

One exception to insurance following the vehicle is with MedPay. If you have this optional coverage to pay your medical bills if you are injured in an accident, it will not apply to the driver who borrowed your car. MedPay only covers the insured person—in this case, you.

Are You Liable If the Driver Gets Sued?

A bigger concern than whose insurance company will pay for damages might be who gets sued if the driver who borrowed your car CAUSED the crash and someone was seriously injured. Car accident lawsuits are based on negligence, so the primary target of a lawsuit should be the driver who was speeding, texting behind the wheel, driving while impaired, or running a red light. Again, your bodily injury liability policy will pay out to the injured party, but only up to the limit of your policy. If the victim claims medical expenses that exceed the policy, their personal injury lawyer could go after the driver and you as the person who allowed a careless or reckless person to borrow their vehicle.

Who You Should NOT Loan Your Car to

Given your potential liability in an accident lawsuit, it might be a good idea to think twice about loaning your car to a friend or family member unless you are certain you can trust them to be cautious. The following types of drivers carry a greater risk of causing an accident:

  • Teenagers or other inexperienced drivers
  • Unlicensed drivers
  • Someone who has been drinking or has previous DUI arrests
  • An elderly person with physical limitations
  • Someone you know to be generally unreliable and irresponsible

Think carefully about who you loan your car to and be prepared to face increased insurance rates—or worse—if they cause an accident in your car.

Our Experienced Car Accident Attorneys Have Seen it All

People who cause car accidents come up with all kinds of excuses in an attempt to avoid taking responsibility for the property damage and injuries they have caused. As personal injury attorneys, we have heard them all. However, if you follow our advice and avoid loaning your car out to people you cannot trust, you can save yourself a major headache in insurance claims and lawsuits. If you were injured by someone driving a borrowed car, we might be able to help you get the full compensation you deserve.

 

James R. Keller
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Partner at Keller & Keller