Lending a car - liability question

dave 911 · dave 911's Garage

We're going to soon be in a position where we will have an extra car at the house, when our daughter starts college. Her good friend will be a senior in high school, and recently totaled her car, and their family is not in a position to be able to buy another car.

We were thinking of loaning our extra car (it's a 95 Camry, we currently don't carry collision and while it runs well, it isn't worth much).

We would drop the car from our insurance while the friend is driving it for the school year, but when our daughter comes back for winter and summer break we would want it back for her to drive. So, we wouldn't want to outright gift the car to them for this reason.

So the question -- if her friend were to cause a collision in a car that was registered to us, could we be held liable? We wouldn't care if she totaled the car but we obviously don't want to be put at any kind of financial risk either.

Thoughts from the lawyers out there?

Tilikum Turbo · Tilikum Turbo's Garage

Not a attorney...but this somehow brings to mind "no good deed goes unpunished"...

I would either sell her the car outright, or let her/her family take up the responsibility of taking care of this situation that she wrecked her own car and now requires outside 'assistance'.

Your greatest liability in all of this will be when things don't turn out as planned, and you'll be the 'bad-guy' when it does.

Just my 2-cents worth.

tedg04 · tedg04's Garage

I'm not sure she would be able to insure it if she didn't own it - some states require ownership.

Sounds like you're trying to do a good thing, but to do so you will have to accept the potential liability.

slodave · slodave's Garage

Here's how it worked for me in Cali (car was given to me by my mom). Since it was a family transaction, we took our time in sending the pink slip in to have the car put in my name. For the three or so weeks I drove the car with it being owned by my parents, they had to keep insurance on it. My own car insurance would have covered damages first, but they would have also been liable and if my coverage ran out, they would be on the hook for the overages. Since the car was registered in their name, I could not insure the car under my policy until the paperwork was sent in. Once the release of liability was received by the DMV (done via Internet), I could insure the car, even without the new pink slip and my parents could drop their coverage on it.

Again, this is for California.

TimT · 06-12-2014, 05:41 PM

Quote:

I'm not sure she would be able to insure it if she didn't own it - some states require ownership.

Millions of people insure vehicles they don't own...

If you lease a vehicle you are still required to provide insurance,

Ditto if you take a loan on a vehicle...

In both cases some entity other than you owns the vehicle..Yet you the operator have to provide, at a minimum, liability insurance. The owner of the vehicle (leasing agency/bank) could require that you hold collision coverage for the duration of the agreement..

The state still requires that the vehicle is insured...

slodave · slodave's Garage

If you finance a car, the pink slip will be registered in your name, but the finance company will also be listed on the slip as a lien holder and they will also hold on to the actual pink slip until you pay the loan off or sell the car. It's still registered in your name, so you can insure it. A car insurance company out here will not put the car on your policy, unless you are the registered owner.

It's safe to say, the issue will be different from state to state.

id10t · 06-12-2014, 06:00 PM

Registration (ie, plates) != title (ownership)

You keep the title on the car, they put plates on it (and the plates will require they get at least some insurance)

All that said, probably better off just selling to your daughter's friend's parents for cheap and being totally dis-associated with it. Of course then you gotta have something for the daughter ....

Dantilla · 06-12-2014, 06:06 PM

I did this a few years back.

Loaned a friend a Mustang Convertible we weren't using. Insurance required friend to be registered owner, while we remained legal owner. Worked out fine.

Noah930 · Noah930's Garage

I'm not a lawyer and I don't live in Ohio, but I wouldn't chance it in the slightest to have my name in any way legally connected to the car if this young girl who is not your daughter and has already totaled a car were to run a red light and mow over a school crossing-worth of kids.

Shifter · 06-12-2014, 06:30 PM

In Oregon, you can go after the vehicle owner in a court of law if there is an accident. Also, parking tickets and photo tickets will go to the owner of the car, not the insured.

Protect yourself. Sell/give them the car or just park it.

As it was said, no good deed goes unpunished. And the road to hell is paved with good intentions.

Noah930 · Noah930's Garage

You're rich because you have a Porsche, right?

Dantilla · 06-12-2014, 06:35 PM

Quote:

Originally Posted by Shifter

In Oregon, you can go after the vehicle owner in a court of law if there is an accident.

Legal owner, or registered owner?

Anytime a car is financed, the bank legally owns the car. The borrower is the registered owner. Nobody sues a bank if a financed car is involved in an accident.

Disclaimer: I'm a resident of Washington State. Your Mileage May Vary. Contents may have settled during shipping. Do not use the top rung as a step.

Steve Carlton · 06-12-2014, 07:28 PM

https://screen.yahoo.com/bad-idea-jeans-000000942.html

HardDrive · 06-12-2014, 07:34 PM

I wouldn't touch that would with a 10 foot pole. Oh heck no.

A sad commentary on the world we live in, but no way. Protect your assets. If you feel that strongly about it, give the kid a car.

T77911S · 06-13-2014, 02:46 AM

there is a lady here at work that needs a car. i have a spare(s). ihave considered lending it to her.

i also work with a guy that lent his car out to someone. got it back in pieces. (almost, but it was messed up pretty good).

wdfifteen · wdfifteen's Garage

"Sell" them the car, but finance it. Write a contract that you'll get it back if it isn't paid for by a certain date. While she uses it, it's hers and her responsibility. She'll have to pay sales tax on whatever the stated sale price is. I would not in any way be the legal owner of a car what a proven bad driver is operating on a regular basis.

greglepore · 06-13-2014, 04:53 AM

The legal concept (at least here in Pa.) is "negligent entrustment"- did you know or have reason to know that the person to whom you lent the car was an incompetent driver (ie a history of tickets, accidents, dui, dangerous behavior behind the wheel etc.).

In almost all states, liability insurance follows the vehicle registration, and you can't register a vehicle that's not titled to you, so they probably can't insure it; however, your insurance covers permissive users, but you should be careful to check to see that there isn't a "regular user" exception. In any event, its unlikely that you can continue to own the car, drop the coverage, and lend it out to them and have them cover it.

(disclaimer-former atty...)

FLYGEEZER · 06-13-2014, 05:26 AM

I don't lend my cars or my toothbrush to anybody .

wildthing · 06-13-2014, 06:00 AM

There are only five other non-family people I would lend my car to for an extended period of time. And I trust these people with my life. Beyond those five, sorry, go rent.

Hugh R · 06-13-2014, 06:38 AM

NO!

I asked a lawyer friend about my 82 y/o MIL driving her car, but living at my house. He said a lawyer would probably face ethics charges if he didn't try and sue me just because she lived with us, in the event of an accident (not vigorously representing his client). Wasn't even registered to me nor owned by me.

I co-signed a loan to get a truck for my son, a few months later I paid off the loan, took my name off the truck and had him pay me the monthly payments. Anything with your name attached can result in you being drug into a court battle.