Am I Liable if My Friend is Driving My Car and Causes an Accident?

The liability of a motor vehicle owner for injuries or damage resulting from the negligent operation of their vehicle by another person hinges on whether the vehicle was used with the owner’s express or implied permission. This principle is not universally applied and is significantly influenced by the permissive use provisions outlined in your insurance policy, which can differ substantially across policies.

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Exceptions to the Permissive Use Rule

The permissive use rule is widely applied, yet specific exceptions in an auto insurance policy may limit coverage under particular circumstances.

Determining the primary coverage in the event of an accident can be complex due to these exceptions. Notable exceptions often include:

• Excluded drivers: Certain individuals may be explicitly excluded from coverage by some insurance policies.
• Business use: Incidents occurring while the vehicle is utilized for business purposes may not be covered by your personal auto insurance.
• Illegal activities: Insurance coverage may be denied if the driver engages in illegal activities at the time of the accident.

The Role of Named Driver Policies

Named driver policies represent a significant departure from the permissive use rule commonly found in auto insurance contracts. These policies specify the individuals authorized to drive a particular vehicle, providing benefits such as potentially lower policy premiums when vehicle operation is limited to a designated group of experienced, low-risk drivers. However, these policies also impose certain limitations.

One major restriction of named driver policies is the possibility of a claim being denied if an accident is caused by a driver not listed on the policy while they are operating the vehicle.

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Illicit Activities

Coverage for accidents occurring during lawful activities is typically provided under permissive use. Conversely, illegal conduct often falls outside the scope of permissive use, potentially exposing the vehicle owner to significant liability.

Impact of Business Use on Coverage

Utilizing your car for work-related activities can affect your insurance coverage in the event of an accident.

Most personal auto insurance policies exclude coverage for vehicles used for business purposes. Therefore, an accident occurring during such use could leave you without sufficient protection.

Commercial auto insurance, specifically designed to cover vehicles used for business purposes, is advisable if you intend to use your car for work.

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Understanding Negligent Entrustment

Negligent entrustment can play a role in determining liability when an accident involves a vehicle driven by someone other than its owner. This concept involves allowing an unfit or unlicensed individual to use your vehicle. Verifying the driver’s qualifications is the responsibility of the car owner.

Rental Car Exclusion

In the case of an accident caused by a renter, their insurance serves as the primary coverage. Nonetheless, car rental companies are required to maintain liability insurance, meeting our state’s minimum coverage (25/50/25) for each rented vehicle. Failure to obtain proof of insurance from the renter would make them liable.

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Oklahoma Case Law Examples

Sheffer v. Carolina Forge Company (2011), Oklahoma Supreme Court

In this case, employees of Carolina Forge were on a business trip and rented a car paid for by the employer. After dining, the employees visited a casino 30 miles away and became intoxicated. The employee driving the car missed an exit and crashed, injuring the plaintiffs.

The injured parties, consisting of parents and minor children, sued the driver’s employer under theories of respondeat superior and negligent entrustment. The trial court initially ruled in favor of the employer. However, the Supreme Court reversed this decision, stating that reasonable minds could disagree on whether the driver acted within the scope of employment and whether the employer had negligently entrusted the vehicle. Thus, negligent entrustment is a matter for the jury to decide. If an employee is on a business trip with no fixed agenda, and the employer condones or permits alcohol consumption, the employer might be held liable for accidents stemming from intoxication under both respondeat superior and negligent entrustment principles.

This case illustrates the potential liability involved in allowing someone to drive your car if you know they are unfit or impaired. It is advisable only to permit friends to use your vehicle if they are sober, licensed, and insured.

Spears v. Preble (1983), Oklahoma Supreme Court

In this instance, Preble had Lambert’s permission to use his car, stipulating that it be returned by 11:30 p.m. Preble used the car to commit a burglary and was pursued by Spears, leading to a collision. Spears sought to collect a judgment against State Farm. The court determined that Preble had been given general permission to use the car; thus, State Farm’s policy covered the accident. The logic was that once general permission for car use is granted, coverage is applicable even if the specific use was not anticipated.

What Happens if the Person Driving My Car Does Not Have Their Insurance?

It is important to remember that insurance coverage is primarily associated with the vehicle, not the individual driver. If an accident occurs, your insurance will likely cover the damages. However, this could increase your insurance premiums and, in more severe instances, legal liability issues.

What happens if the plaintiff is also at fault?

If both drivers are partially at fault, the jury will assign a percentage of blame to each driver. If the fault assigned to the plaintiff is less than 50%, the verdict will be reduced by that percentage. If the plaintiff’s fault is 50% or more, they will receive nothing from the judgment.

What Happens if the vehicle is uninsured, but the driver borrowing it has insurance?

Oklahoma law mandates that all motor vehicle owners maintain liability insurance on their vehicles at all times. Should the owner’s vehicle be uninsured, the owner could be held liable for damages resulting from the negligence of a permitted driver. The driver’s motor vehicle liability policy would serve as the primary coverage for the accident. If the driver’s policy limits are insufficient to cover the damages, the owner could be held jointly and severally liable for the excess damages due to the failure to maintain the required insurance on the vehicle.

What Are the Potential Consequences if I Lend My Vehicle to Someone With a Suspended License?

Lending your vehicle without ensuring the borrower has a valid license could lead to civil liability or criminal charges for negligent entrustment in certain situations.

A person driving your vehicle with a suspended license could face misdemeanor charges. The penalty for a first offense ranges from a $100-$500 fine. A second offense carries a $200-$750 fine; a third offense could result in a $300-$1000 fine and/or up to 1 year in prison. If your friend causes an accident, you could be liable for negligent entrustment. Specific penalties vary by jurisdiction but often include monetary fines, increased insurance costs, and the risk of being sued.

You may be held responsible for any damage or injury caused by the unlicensed driver you allowed to use your vehicle, and your insurance may not offer coverage. You could be on the hook for the injured party’s medical bills and pain and suffering, such as a PTSD claim.