You've lent your car to a friend for the day. When he gets back, you get the bad news — he's wrecked your car. Even worse, you find out he doesn't have car insurance of his own. Fortunately, if you let someone drive your car, his insurance — or lack thereof — doesn't apply to an accident that happened with your vehicle.
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Regardless of who's driving the car, the fault in an accident applies to the vehicle owner. That means that if you lend your car to a family member or friend and she crashes it, the other driver can still take you to court for the damages. It also means that your car insurance is involved in any claims. The insurance of your friends doesn't matter, regardless of whether they have any, according to CarInsuranceRates.com. When lending your car to friends, keep this in mind, as you'll be liable if anything happens to the car in their care.
Auto Insurance Coverage
Not all auto insurance policies cover damage caused by someone not on the policy. Consult your auto insurance company to find out if this is covered next time you want to lend your car to someone. With this kind of coverage, the car insurance company will have to pay for damages regardless of who was driving the car at the time. Keep in mind that some insurance companies are reluctant to pay, even when it's clearly written in the policy. The auto insurance company may need more coaxing to pay, as it might use this situation as an unnecessary excuse, Christopher Neiger points out on Entepreneur.com.
The Thievery Exception
There are a few exceptions when it comes to fault. If you lent your car to a friend and it was later stolen, you aren't responsible for damage that occurred during the theft. If anyone takes your car without permission, including family members who take the car for a joyride without asking, it's the driver's responsibility and not the owner's.
The Valet Exception
Valets at restaurants or hotels aren't immune to accidents. If you get your car back after dinner to find it damaged, you aren't liable. Instead, the valet service has its own insurance to cover damages. Talk to the valet management to get its insurance information so you can file a claim.