There are many questions people may have about loaning their car out to a friend or family member. Even if it is just for a quick errand, it is a good idea to consider the possible consequences if the person who borrows your car crashes it. How does insurance apply in that situation? Could you be sued if the person who borrowed your car is at fault for a crash? Could your friend or family member sue you?
Our Grand Rapids car accident attorneys are always ready to help if you or a loved one has been injured in a car crash. Your initial consultation is completely free, and there are no upfront costs if we represent you.
Whose Insurance Pays for No-Fault Benefits?
If someone borrows your car, crashes it and is injured, he or she should be eligible to file a claim for Michigan no-fault benefits through one of the following ways:
- Under his or her personal car insurance policy
- The insurance policy of a spouse
- Via a resident relative’s insurance policy
- Through the Michigan Assigned Claims Plan – if no other insurance applies
By filing a no-fault benefits claim in this way, he or she would be able to cover the costs of all related medical treatments and lost wages. Benefits would only apply up to the limits of the coverage purchased under their personal injury protection (PIP) insurance.
Pain and Suffering Damages
If the person who drove your car was injured, but not at fault for the crash, he or she may also be eligible to seek excess economic damages. This lawsuit would be against the insurance of the party who caused the crash, and not against you or your insurance. To qualify, the injured victim would have to meet the state’s injury threshold requirements.
If eligible, the driver injured while operating your car may be awarded compensation for noneconomic damages, such as:
- Emotional distress
- Post-traumatic stress disorder
- Loss of companionship
- Disfigurement or scarring
- Loss of enjoyment of life
- Physical impairment
When No-Fault Benefits Do Not Apply
There is likely no eligibility for a no-fault benefits claim in Michigan if someone else borrows your car, crashes it and any of the following is true:
- The person willingly and unlawfully drove your car but did not have your permission
- The individual who drove your car is listed on your policy as an excluded operator
- The driver is an out-of-state friend or relative and does not have Michigan car insurance
What if the Person Who Borrows My Car Causes Property Damage?
The insurance coverage that applies depends on what type of property was damaged by the person driving your car.
Michigan’s Mini-Tort Law
The mini-tort law applies if the person driving your car caused the crash and damaged the other party’s vehicle. On a Michigan car insurance policy, this coverage may be labeled as limited property damage liability. This type of claim would help the other party recover up to $3,000 in damages. If the other party has collision coverage, this compensation can also be used to pay for the insurance deductible on their policy.
Property Protection Insurance (PPI)
PPI is required coverage for every driver in Michigan. It is used to cover up to $1 million of any accidental damage to tangible property, regardless of fault.
What if My Car is Damaged in the Crash?
You can also seek to recover damages under the mini-tort law of the at-fault driver and your own insurance policy’s collision coverage. That said, collision coverage is optional. So if you did not purchase it, you will only have the $3,000 provided under the mini-tort law.
Am I Liable if the Crash Causes Harm to Another Party?
That depends. It is possible you could be sued if the person driving your car caused the crash and another party suffered serious or fatal injuries. However, under Michigan law, (MCL 257.401(1)), you are only liable if your car was being driven with your knowledge and consent.
If another party is injured and your car was driven with your permission, then your liability insurance, which is required coverage for all Michigan drivers, would apply.
That said, you could also be held personally liable for the damages if:
- The damages exceed the limits of your liability coverage
- You loaned your car to someone listed as an excluded driver on your insurance
It is a good idea to review your insurance policy to be sure you have the coverage you need. Additionally, it is important to be cautious when considering whether to loan your car to someone else. Even if it is someone you know to be a safe driver, are you prepared to take on the risks if they have a crash?
Have Questions After a Car Crash? Jay Trucks Has Answers
Contact our law firm anytime, night or day, to schedule your free initial consultation. There is no obligation to file a claim or hire our services after this meeting.
If you have a claim and we represent you, there are no upfront costs or fees to pay. We only get paid if we first recover compensation for you. Call to schedule your zero-cost, no-obligation case review today.
