By: Chris E. Russell, Newport Beach Personal Injury Lawyer
‘Baby, you can drive my car.’ The Beatles popularized that line in their 1965 song “Drive My Car.” It is a simple song with a great beat and was one of their biggest hits during their 1960’s heyday. In the real world, however, asking someone to drive your car can be fraught with liability, insurance claims issues and concern about who is going to pay, if heaven forbid, the person who drives your car gets into an accident. Based on the numerous office calls I get on this fairly straightforward issue, confusion about who owes what abounds. The following article is intended to bring some clarity to the issue.
Simply put: under California law, if a person loans their car to someone else, the owner of the vehicle is only responsible for property damage up to $5,000. If someone was hurt in the accident, the liability for the owner of the car is capped at $15,000 for each individual who was injured and at $30,000 for everyone who was hurt or even killed. In other words, if 10 people in the car are all seriously hurt, the owner of the car that caused the accident only has liability up to the $30,000 cap. So, under California law the total liability for the person who owns the car is $35,000.
Of course in law, just like in life, there are exceptions to the rule:
1) If you “negligently entrust” your car to be driven by a person who causes a crash. This means you allowed your car to be driven by someone who you knew to be unsafe behind the wheel and who was likely to cause an accident. An example of this would be allowing someone who is obviously drunk to drive your car or allowing Billy your nephew with the 6 moving violations in 3 months, drive your car. When you “negligently entrust” your car to someone else and they cause a collision, the caps come off and now you are on the hook for all of the damages incurred.
2) The other exception is if the driver of your car is your employer. This happens when a person is working for you and during the course and scope of their employment cause a crash with a vehicle you own. Since they were “furthering the interests” of your business, and we want businesses to be accountable here in California, once again, the cap comes off.
The good news about someone causing an accident when driving your car (if there can be good news) is that if the person to whom you loaned the car was not an insured on your policy and was not a relative living with you at the time, your insurance rates cannot go up (this is according to Proposition 103 passed in 1988 by the voters over the screaming and crying objections of the Insurance Industry. I love Proposition 103.)
Keep in mind that the above caps only help you if someone else is driving your car. If you are driving your own car and cause an accident, you are on the hook for all of the damages the other parties have incurred; which means that if you have any assets at all, you should purchase coverage significantly in excess of $5,000 for property damage and $15,000/$30,000 for bodily injury claims.
Chris E. Russell is a Newport Beach Personal Injury Lawyer. His firm, Russell & Lazarus, APC, represents accident victims throughout Orange County, Los Angeles County, Riverside County, and San Bernadino County. If you have any legal questions contact Chris and his experienced team today at (949) 851-0221.