What Liability Do I Have When My Child Loans Her Car to Another Child?

If your child loans your car to a friend, you are still liable for insurance purposes.

Car insurance policies cover drivers and their cars when an accident occurs. The insurance of the driver legally at fault for the accident is the one paying benefits. When someone else drives the car, the owner is still legally liable.

Car Insurance Policies

Most car insurance policies contain clauses about drivers other than the owners of the car. If the car was loaned with permission, your car insurance policy will cover any damages resulting from accidents.

Accidents with Severe Damage

If your child loans your car to someone and he causes an accident with severe damage, one of two things might happen. If the amount of the damage--both medical and property damage--is within your policy's limits, then your policy will pay. If not, however, courts can claim your personal assets to make up the difference.

Car Insurance Premiums

Even if your child's friend causes an accident with minimal or no damage to life or property, your car insurance company will increase your premiums.

References

• Insure.com: When Your Friend Crashes Your Car: The Rules of Auto Liability