Hold On To Your Keys! What You Should Know Before Lending Out Your Car

Lending your friend your car might not seem like a major deal, but if that friend gets in an accident, it could open up a whole can of worms that you may not be prepared to deal with. We've taken a look at a few different circumstances involving someone other than you, the car owner driving the car and getting into an accident.

When Friends Crash Your Car
In general, your auto insurance kicks in when your friend has an accident in your car. Even if the friend has his own auto insurance coverage, your auto insurance is the primary coverage. The accident will be covered under collision auto insurance and the deductible will need to be paid.

When Your Auto Insurance Coverage Is Not Enough
What if damage to the other party is beyond your liability coverage? Well then it starts to get a little more complicated. If your friend has auto insurance, the expenses can be shared by both auto insurance providers. However, if your friend does not have coverage and damages exceed your insurance limits, you can be sued for the remainder and could possibly lose your assets to settle the debt.

When Your Car is Taken Without Permission
What if a friend borrows your car without your permission? The aforementioned examples all assume that you let your friend take your car. But if a friend takes the car without your consent, in most cases you are not liable for any damage that they cause, but only if this fact has been established. Your friend will have to use their auto insurance to cover the accident. If your friend has no auto insurance, there is a chance you still could be left with the bill no matter how unfair that may seem. If your car is stolen and the car thief crashes, you won't be liable for any damages to others, but you may have to use your auto insurance to repair your own car.

Think Before You Loan Your Car
Make sure you know the legal ramifications and financial consequences that could result from lending your friend your car. Make sure you are aware of your friend's driving habits and whether they have auto insurance. Above all, make sure they have a valid driver's license. No auto insurance company, whether it is yours or your friends will pay damages for someone without a driver's license.