I was recently asked an interesting question on a legal forum about car accidents in other people’s cars. I decided to share my answer with my own readers, as I get this question quite a bit. People get in car accidents all the time when they are not driving their own motor vehicles or when they’ve loaned their own car to someone else to drive:
Q. What happens if a friend wrecked my car, would they be covered by insurance?
A. When another person is driving your car and causes a wreck, both of you can be sued. You are responsible under Michigan’s owners liability law as the vehicle owner. The person driving the car could also be sued for negligence for causing the car accident.
Even though you are being sued as the owner of the vehicle, and your name will be on the lawsuit complaint, understand that in almost all cases it is your own auto insurance company that will hire a lawyer, defend the lawsuit, pay all legal costs and expenses of defending you, and ultimately pay a settlement that will be within your insurance policy limits.
If both the driver and vehicle owner are insured
If the driver who wrecked your car has their own insurance, then their own car insurance will also be involved. The driver’s insurance will represent and defend the driver, and your own insurance will represent and defend you.
If the driver is uninsured and the vehicle owner is insured
If the driver who wrecked your car does NOT have car insurance, then your own insurance company will defend the driver.
It’s important to always point out that if a car accident lawsuit goes to trial and a verdict, there is still a personal financial risk to you as the owner of the car.
If the person you let drive your car causes serious injuries that are worth more than your own liability policy limits, you would be personally responsible for the amount of a jury verdict that exceeds your insurance policy limits.
This is a big reason to make sure that your liability policy limits on your insurance are as high as you can reasonably afford. This is also why you should be careful with who you let drive your car. Finally, this is why it is important to consider hiring private counsel of your own to protect yourself and to make sure your insurance company is reasonably adjusting a claim against you or settling the lawsuit against you when it is reasonable to do so.
If both the driver and the vehicle owner are uninsured
If neither the driver nor the vehicle owner has insurance, then both may be sued directly.
Does my car insurance cover other drivers?
Your car insurance covers anyone driving your vehicle with your permission. But again, it will only protect you up to the limits of your bodily injury liability coverage on your policy. If you let someone use your car and they cause a serious injury such as whiplash requiring surgery or traumatic brain injury, $100,000 or $250,000 in liability coverage may not be enough to compensate that injured person. If your insurance company doesn’t settle the case within your limits, you could be paying out of your own pocket simply because you let someone else drive your car.
Also under Michigan law there may be issues with how frequently you are letting someone drive your car. This is called “constructive ownership.”
Does anything mentioned above change under the new Michigan No-Fault Insurance Law?
Michigan now has a new auto No-Fault Law which Gov. Whitmer signed on May 30, 2019.
Michigan drivers should be aware of the liability limits that will be available to them when they go to renew their car insurance policies or to purchase new insurance. The new Michigan No-Fault insurance law requires drivers to carry at least a minimum of $50,000 in liability bodily injury coverage. As auto accident lawyers in Michigan who see far too many serious crashes and very serious injuries, we strongly recommend you carry at least $250,000 in liability coverage, which is the new default amount. The difference in price between $50,000 and $250,000 in liability coverage is incredibly small. While choosing the new default amount of $250,000 may result in a small increase in your premium, there should be a much larger sense of security knowing you are far less likely to be personally financially responsible if you or another driver who is driving your car causes a car accident. For these same reasons, our attorneys also recommend you purchase what is called uninsured and underinsured (UM/UIM) coverage so you don’t have to worry about protecting you and your family if you are seriously injured by a driver who has only the minimum $50,000 in liability bodily injury coverage.
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.