Vehicle Insurance

Reader’s Question:

What happens if I lend my car to a friend and she was involved in an accident? Who will pay for the damages? Will my friend’s vehicle liability insurance cover for any damages sustained by both parties?

Anne

Portland, ME

If you lend your car and your vehicle sustained damages from an accident while your friend was driving it, your own car insurance will cover these damages. You will be held liable for any accidental damages inflicted by a collision as you were the primary owner of the car and the primary insured. As you confidently lend your car, you also lend your insurance with it. You cannot avoid liability just by stating the fact that you are not the one behind the wheel. An auto insurance policy especially Collision coverage follows the car and not the owner regardless of who is driving.

However, if the third party’s at fault, his vehicle liability insurance could cover for the damages. But, assuming you have a No Fault policy, your insurance policy will take effect first. You can ask for reimbursement, if the third party agrees to take charge and be held responsible. But, should your friend be held responsible, your insurance policy will pay for all the damages including third party injury. This will be paid for by your liability insurance.

But, if your friend has his/her own insurance policy, he/she could cover an excess of any damages exceeding your policy limits.

Whenever possible, lend your vehicle only to a friend whom you have always known as responsible driver. Remember: Even though you are not the actual driver when an accident happens, it will still have an impact on your premiums. It will be put on record and you can expect a rise in premiums when this happens.