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

In general, the owner of a motor vehicle is liable for injury or damage caused by the negligent operation of the vehicle if it is being used with the owner’s express or implied consent. This principle isn’t universal and depends heavily on the permissive use stipulations mentioned in your insurance contract. These stipulations can vary widely from one policy to another.

Exceptions to the Permissive Use Rule

While the permissive use rule is generally applied, there can be specific exceptions within an auto insurance policy that limit coverage under certain conditions.

Figuring out who has primary coverage when accidents occur can become complicated due to these exceptions. Common ones often include:

• Excluded drivers: Some insurance policies may specify certain people who are not covered.
• Business use: Accidents while the vehicle is being used for business may not be covered by your auto insurance.
• Illegal activities: The insurance may refuse coverage if the driver participates in illicit activities during the accident.

The Role of Named Driver Policies

Named driver policies are a notable deviation from the permissive use rule, often seen in auto insurance agreements—these policies state who is authorized to operate a specific vehicle, offering a range of advantages. Benefits of such policies can include a potential reduction in policy premiums when vehicle usage is restricted to a select group of skilled, low-risk drivers. However, these policies also come with certain restrictions.

Restrictions of named driver policies can include the chance of claim rejection if a driver not listed on the policy causes an accident while operating the vehicle.

Illicit Activities

Permissive use typically provides coverage for accidents during lawful activities. At the same time, Unlawful conduct often falls outside the permissive use rule, which can expose the car owner to considerable liability.

Impact of Business Use on Coverage

How does using your car for work-related activities influence your insurance coverage if an accident happens?

Most personal auto insurance policies don’t cover vehicles used for business activities. So, if an accident occurs during work-related use, you might find yourself without adequate protection.

If you plan on driving for work, you likely need commercial auto insurance specifically designed to cover vehicles used for business activities.

Understanding Negligent Entrustment

Negligent entrustment is sometimes a factor in deciding responsibility when an accident involves an owner’s car driven by someone else. This term refers to knowingly letting an unfit or unlicensed individual enter your vehicle. As the car owner, you must verify the driver’s capability.

Rental Car Exclusion

If the renter causes a wreck, their insurance is the primary coverage. However, car rental companies must have liability coverage for our state minimum coverage (25/50/25) for each vehicle they rent. They would be on the hook if they failed to get insurance proof from the renter.

Oklahoma Case Law Examples

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

Employees of Carolina Forge were on a business trip and rented a car paid for by the employer. After dinner, the employees went to a casino 30 miles away, becoming intoxicated. On the drive back, the employee driving missed an exit and got into an accident, injuring the plaintiffs.

Parents and minor children injured in a car accident sued the driver’s employer under theories of respondeat superior and negligent entrustment. The trial court granted summary judgment to the employer. Supreme Court reversed, finding reasonable minds could differ on whether the driver was in scope of employment and whether the employer negligently entrusted the vehicle. So, negligent entrustment is a question for the jury. Suppose an employee is on an open-ended business trip, and the employer encourages or authorizes drinking. In that case, the employer may be liable for accidents related to intoxication under respondeat superior and negligent entrustment.

How this case applies to letting a friend drive your car:  liability can arise if you let someone operate your vehicle knowing they are incompetent or impaired. It’s best to avoid letting friends go to your car unless you know they are sober, licensed, and insured.

Spears v. Preble (1983), Oklahoma Supreme Court

Preble borrowed Lambert’s car with permission and a restriction to return it by 11:30 p.m. Preble committed a burglary with the car and was chased by Spears, resulting in a collision. Spears sued to collect a judgment against State Farm. The court found that Preble had general permission to use the car without restrictions, so State Farm’s policy covered the accident. The rationale is that once general permission is given to use a car, coverage applies even if the particular use was not contemplated.