Sharing Your Vehicle

We are often asked by our customers if it is ok to let a friend borrow their car. “Is it covered?” I get asked. Yes it is covered, I respond, however you are responsible for their actions while they are in your car.   You may be thinking that if you let someone borrow your car and they go out and commit a crime, you are not going to go to jail, and you are probably right. I am not talking about that kind of responsibility, I am referring to the kind that hits you where it hurts, your wallet.

This past year we had a customer who was selling their car to a family member. Before the sale of the car occurred, our customer allowed the family member to drive the car to the grocery store. While parking the car, the driver accidentally hit the gas instead of the brake, propelling the car into two other cars and striking a pedestrian.  The pedestrian was taken to the hospital with a head injury and then air-lifted to another hospital where she underwent emergency surgery.

Because our customer still owned the car, their insurance is responsible for this claim although they weren’t responsible for causing the accident. This customer had $500,000 in liability limits on their auto policy. Their insurance company agreed to pay the full policy limit on this claim due to the medical bills and the pain and suffering the injured woman sustained.

Unfortunately, the injured woman and her attorney did not accept the payment. They believe that she is due much more than the $500,000 the insurance company is offering. As a result, our customer (who was not at fault in the accident) is being sued. Since they do not have an umbrella policy, any amount awarded over the $500,000 will be their responsibility.

This is not a case in which the insurance company isn’t willing to pay a claim. They have agreed to pay the full policy term limits and are in no way trying to avoid payment. If the woman and her attorney were to accept the payment, they would sign a form releasing our customer from liability, but they are not ready to do that. And so the lawsuit continues…

An umbrella policy would have covered liability in excess of the auto policy’s $500,000 limit and could have satisfied the woman’s demands without going to court. These policies are available at surprisingly affordable rates.  So, the next time you are asked by someone to borrow your car, think long and hard before you answer. You might even give me a call and let me tell you why an umbrella policy is always a good idea. 

R. Andrew Turner

Risk Management Advisor