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If I allow someone to use or borrow my car, would they be covered in an auto accident?

Insurance lawyer Steve Gursten answers this common question about someone driving your car

I was recently asked an interesting question on a legal forum called I decided to share the answer with my own readers, as I get this question quite a bit when people are injured in a car accident, BUT the car accident occurs when they are not driving their own motor vehicles:

Q. If I allow someone to use my car in Michigan and something happens, would they be covered?

A. Yes and no (sorry for having to answer like a lawyer, but you’ll see why as you read on). There will be insurance under Michigan’s owner’s liability law. This would be your own No-Fault auto insurance as owner of the vehicle.

In any civil lawsuit filed for injuries and pain and suffering damages as the result of an auto accident that the driver of your vehicle causes, both you as owner and the person driving the car will be sued.
Even though you are being sued as the owner of the vehicle, and your name will be on the complaint, understand that this is really more of a legal fiction in most cases as your own auto insurance company will hire a lawyer, defend the lawsuit, pay all legal costs and expenses, and ultimately in most cases pay a settlement within your policy limits.

The reason we do this is Michigan does not want a jury to know that an insurance company will be paying the verdict, so juries are not told there is insurance and what the policy limits are of your insurance. Now, the driver will also be a party and faces the same exposure, so the issue will be is the driver insured or not?

If the driver of your vehicle is insured, then just like with you as the owner, the matter is turned over to the driver’s insurance company and the matter will be defended the same way. If the driver is uninsured, then the driver risks personal exposure of his or her assets. I should note that the same risk also applies to you as the owner. If the driver of your titled car caused serious injuries over and above your policy limits and a verdict is returned by a jury that exceeds your insurance policy limits, you also could face personal exposure if the case against you is not settled within the policy limits, although doing this every single day for almost 20 years, I can tell you that the risk to you is far less than it will be to the driver in this situation.

I hope this helps. I’ve written about this risk, and the other two areas under Michigan law where someone who is injured by the driver of your car is entitled to help: under the Michigan mini tort, our first party No-Fault law, and the third-party pain and suffering law that I’ve summarized above here.

– Steve Gursten is a Michigan insurance lawyer. He frequently writes and speaks about Michigan No-Fault and auto insurance, and is available for comment.

Related information:

What happens if I’m in a car accident while driving another person’s car in Michigan?

Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights. Call (800) 777-0028 to speak with one of our Michigan insurance lawyers.

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