Automobile insurance generally follows the car rather than the driver. This means that the owner of a vehicle could potentially be held liable for damages caused by anyone else who drives it. However, coverage differs from policy to policy, and varies depending on the situation, and a driver should be aware of the terms of his own policy.
The most common situation where a person other than the owner is driving a vehicle is where a parent allows their child to drive their vehicle. Whether a parent will be held liable for the negligence of their child, as applied to motor vehicle accidents, is determined by the “Family Car Doctrine.” See Can I Be Held Responsible For Damages Caused By My Child?
However, where a person resides with the owner of the vehicle, and uses the vehicle on a regular basis, many insurance policies require that this person be listed as an “insured” under the policy in order to be covered. To be safe, every person (of driving age) who resides in one home should be listed on every applicable insurance policy.
But what about a situation where a friend borrows the car and causes damage? The vehicle owner will be held liable for damages caused by a friend who he allowed to drive the vehicle. The only way to avoid liability in this scenario is by proving the friend did not have permission; this is difficult to do because insurance companies assume permission absent clear indications to the contrary.
Where a vehicle owner allows a friend who is an incompetent, reckless, or unfit driver to drive his vehicle, the vehicle owner will likely be held liable under the theory of negligent entrustment. Some examples of an incompetent, reckless or unfit driver include one who is drunk, underage and/or unlicensed, ill or otherwise not physically able, and someone with a history of bad driving.
On the other hand, where a vehicle is stolen from the owner and driven without permission by a criminal, the vehicle owner will not be held responsible for damages caused or injuries incurred. However, in the case of an accident, the vehicle owner is likely to be stuck with the bill for his own vehicle repairs.
It is for these reasons that, prior to loaning your vehicle to another person, you be familiar with the terms of your policy, know what kind of driver the person is, and deny permission to anyone you are not prepared to be held liable for.