Why You Shouldn’t Lend Your Car to Family or Friends

Hi I’m Roger Ghai and I wanted today to talk about two areas of liability or potential liability if you loan your vehicle out to someone. One is called vicarious liability and what that means is this. Let’s take an example that your teenage son or daughter is not on your insurance policy, but you’ve loaned that vehicle out to them to drive anyhow and they get into an accident.
Now, what happens is even though they’re not on the insurance policy, you can still be held responsible — or liable in other words, for any damages that they cause by operation of the motor vehicle. You want to make sure that before you loan the vehicle out to your son or your daughter, that they are going to be responsible, that they’re going to be mature enough to be able to drive and — of course, know the rules of the road, they have a driver’s license and so forth.
There is another way in which you could be responsible for someone else causing an accident and that is what we call respondeat superior — it’s a legal term. That basically primarily involves a situation where you might have a business and then you have an employee driving your vehicle. Could be a van, could be any type of business and they’re negligent, they get into a motor vehicle accident.
Now, even though you are not or have not been driving the vehicle, you could still be held responsible. You want to make sure that you have plenty of insurance. Another area that I want to talk about is what we call respondeat superior and that’s a legal term. It basically involves a situation between an employer and an employee relationship. Let’s use an example. Let’s say you’ve got a food business and you’ve let the employee drive the truck or the vehicle to make deliveries of food.
Let’s say they cause a terrible motor vehicle accident. Even though you’re not the one that’s been driving, you and your company could be held responsible for any damages that that driver makes or causes I should say.
What you want to do, there are some rules that applies to whether you’d actually be held liable but if that driver, that person is driving on company business during the normal hours that they were supposed to drive and that’s exactly when the accident happens, then — yes, you’re going to be held liable. You’re going to want to make sure that you’ve got proper limits.
You certainly don’t want to have exposure to some liability and then not have enough insurance limits because they can suit both you, the driver and the company and then expose whatever assets the company has to satisfy any judgment that’s obtained against the actual driver.
If you have any questions feel free to call my office at 770-792-1000