Allison let her friend borrow her car and didn’t realize it would turn into an insurance headache. Her friend claimed that Allison was the person driving when the vehicle ran into a ditch. When the police called her home to ask for details, Allison was faced with the question, “What happens if my friend crashes my car?”

Insurance policies often have allowances for these situations, but you may want to double-check your coverage to avoid paying the bill for someone else’s mistake. Let’s examine how insurance works for borrowing a car and whose insurance should pay for repairs and injuries.

Occasional vs. Regular: How Often They Borrow Can Affect Your Insurance

Nearly every automotive policy extends your coverage to instances where you lend the car to another person. This ability to loan your car and maintain coverage is called permissive use. Your insurance works the same as if you are the person driving and pays out claims as needed. You’ll want to review your policy to see if it includes permissive use and familiarize yourself with any limitations.

Permissive use is intended for situations where the person only borrows the car occasionally. However, if the person is someone who will use the car regularly, such as a new teenage driver in your home, most insurance companies require that you add them to your policy.  

How Does Insurance Protect Me When a Friend Borrows My Car?

If you don’t already have it, adding collision coverage is a smart move since this will pay for the cost of repairs to your car. This can be useful to prevent your friend from paying out-of-pocket for the damage they caused. However, another smart tip is to never lend your vehicle to someone who doesn’t have their own auto insurance to cover any damages that result from their driving.

If they don’t have their own policy and yours is forced to pay, you could exhaust your coverage limits and be responsible for whatever is left. You could try to have your friend pay for it and hope they will be the kind of person who does the right thing. In situations like this, however, people will sometimes surprise you. If the amount is substantial and they refuse, you may have to resort to filing a lawsuit to get them to pay up.

You are legally required to carry liability insurance, which pays for damage and injury to other people when your car is in a wreck. California liability minimums are as follows:

  • $15,000 to cover injury or death to one person
  • $30,000 to cover injury or death to two or more persons
  • $5,000 for damage caused to property

The best protection when you lend your car to a friend is for both of you to have insurance that includes liability and collision coverage. Collision pays for damage to your own vehicle. It’s not required under California law, and you must voluntarily add it to your policy. Having this additional insurance can keep you from paying to fix your own car.

My Insurance vs. Their Insurance

When you loan your car to someone, they are also borrowing your insurance. Even if they have their own coverage, California is an at-fault state, which means the person who caused the accident must pay the damages. Your friend’s insurance will be used first, but as we mentioned before, if the coverage amounts are low, the person they hurt could come after your insurance as a backup.

This can lead to a lot of legal confusion and potential bad blood between you and your friend. If their insurance only has the minimum amounts and these don’t cover the medical costs, your friend could file a third-party claim against your insurance to pay the rest. The injured person could also decide to file a claim on your policy. 

Finally, if your friend had no insurance at all, you could be forced to file a lawsuit to recover any extra money you have to pay out-of-pocket once your insurance has been exhausted. It can get complicated very quickly, and you could need the help of a qualified attorney to sort it out. 

California’s Fault Rule for Accidents

When someone causes a crash in California, they are considered at fault and liable for all resulting damages. Their policy may cover most or all of the expenses, but if it doesn’t, the person who was hurt can seek payment from additional sources.  When your friend causes a wreck, they must pay first, but the plaintiff can come after your insurance.

If your friend was in a crash that wasn’t their fault, then you and your friend can seek restitution from the other driver’s insurance or file a lawsuit against them. You can recover both medical expenses and vehicle repair costs this way.

Proving fault can be difficult and requires high-quality evidence to show what happened. A skilled attorney can gather video, photos, accident scene investigation reports, medical bills, witness statements, and other documentation to show who played what part in the crash. This can protect you from paying more than is necessary.

When Someone Drives Your Car Without Permission

While you are usually aware of when someone else is driving your car, there are some cases where it might be taken without your permission. In these situations, your insurance will not cover any accidents. These instances include:

  • You didn’t give them permission: If a friend takes your car, but you told them not to or you didn’t know they took it, their coverage will pay first. However, the injured person may still try to sue you for compensation, and you’ll have to prove you didn’t give the driver permission.
  • You’ve excluded the driver from your coverage: You can tell your insurance to exclude someone from your policy. If they take your car, your insurance will not cover their accident. 

If Your Car Is Stolen

Whether a friend or a stranger steals your car, if it’s taken without your knowledge or permission, then you are not required to pay any bills. The driver is using it without authorization, so you aren’t responsible for what they do with it. A good way to strengthen your claim that you are not liable for damages is to produce a police report of the theft.

Understand Your Liability With Help From a Reputable Attorney

Perhaps the best advice on letting a friend borrow your car is: don’t. Although they may be someone you trust, you can never predict the circumstances that could lead to a crash. You could be forced to pay bills for an accident you didn’t cause, on top of potentially losing a friend in the insurance fight that might follow. 

Regardless of how minor the crash is, you should take steps to understand who is liable by consulting with an experienced personal injury lawyer.