What Happens If Someone Else Drives My Car and Causes an Accident?

You loaned your car to a friend, and they got in a crash. How will this affect you?

Situation One: Your Friend was at Fault for the Crash

Michigan has owner’s liability. Under Michigan law, if a person was driving your car, with your “express or implied consent or knowledge,” and got in a crash, you are “liable for an injury caused by the negligent operation of the motor vehicle.” MCL 257.401(1).

In other words, if you willingly loan your vehicle to another person and they get in a crash, you are financially responsible for that crash. For that reason, it’s important to think carefully about who you allow to drive your car. 

Fortunately, if you had insurance, it generally pays for the crash victim’s damages. Michigan law requires “residual liability insurance.” MCL 500.3101(1).

Residual liability insurance covers bodily injury and property damage. In Michigan, drivers are required to carry minimum liability insurance coverage of $250,000/$500,000, unless a driver specifically opts for the lower limits of $50,000/$100,000. MCL 500.3009(1)(5)(8). 

If the injuries to the crash victim exceed your liability insurance coverage limits, then the person you lent the vehicle to, and you could be personally liable for any damages over and above the limits. A driver wishing to limit their personal financial exposure can purchase additional liability coverage over and above the state minimum of $250,000, or $50,000.

Property Protection Insurance Coverage

If the person you loaned your vehicle to damaged another person’s property, property protection insurance (PPI) coverage will cover the loss. PPI covers “accidental damage to tangible property,” which “consists of physical injury to, or destruction of the property and loss of use of the property so injured or destroyed.” MCL 500.3121(3). 

PPI does not cover the damage to the other vehicle. The crash victim would go to their insurance, specifically their collision insurance coverage, for the property damage to their vehicle.

However, the crash victim can come after your friend as the at-fault driver, and you as the vehicle owner, for up to $3,000 for property damage to their vehicle. MCL 500.3135(3)(e). This is known as the Michigan Mini-Tort law. Your liability insurance would cover the Mini-Tort for you.

Situation Two: The Other Driver Was at Fault for the Crash

If you loaned your car to someone who was involved in a crash, and another driver was at fault for the crash, the person to whom you loaned your car can sue the at-fault driver for their pain and suffering damages.

These include damages for their physical and emotional harm and the loss of their quality of life as a result of the crash. The other driver’s liability insurance will typically pay for these damages. 

Regardless of who was at fault for the crash, the person to whom you loaned your vehicle can generally recover their medical bills and wage loss from their auto insurance. 

Michigan has a No-Fault insurance system. It is called “No-Fault” because Michigan residents can recover Michigan No-Fault benefits, including medical bills and wage loss, regardless of whether they were at fault for the crash.

Generally, if you loaned your car to another person and they were involved in a crash, they will go to their auto insurance company to pay for their medical bills and wage loss.

If they didn’t have a car but lived with a resident relative who had a car and insurance, they will generally go to the resident relative’s insurance policy for Michigan No-Fault benefits.

If neither of those things is true, they will typically go to an insurance fund called the Michigan Assigned Claims Plan for payment of those benefits. 

However, not everyone gets Michigan No-Fault benefits. If you loan your car to a person and they are in a crash, they are not eligible for Michigan No-Fault benefits when:

• they took the vehicle unlawfully (MCL 500.3113(a))
• they were an out-of-state resident (MCL 500.3113(c))
• or they were an “excluded operator” under MCL 500.3009(2).

Under these circumstances, the person you loaned your vehicle to will not be eligible for Michigan No-Fault benefits. 

Michigan law is complicated. If you loaned your car to someone and another person hit them (aka the person you loaned your car to was not at fault for the crash), we recommend you contact Conybeare Law Office to better understand your rights and the insurance benefits available.

If, on the other hand, you loaned your car to someone and they caused a crash, then you should immediately call and work with your insurance company.

Conybeare Law Office only represents crash victims. It does not represent at-fault drivers. Those drivers should contact their insurance companies. 

Call or Contact Conybeare Law Office Now  

It can be difficult to know who to talk to after a car accident, but having an experienced Michigan car accident attorney can help alleviate much of the stress and uncertainty that comes after an accident.

The knowledgeable car accident lawyers at Conybeare Law Office will help you understand your rights so you are in control, and they will fight to get you the money you deserve. To learn more about the wide range of legal services offered to our Michigan car accident clients, talk to our office today.

Conybeare Law Office has offices in Saint Joseph and Kalamazoo, Michigan, and proudly serves all of southwest Michigan and beyond. Call or contact us for a free consultation. We look forward to talking to you.

Related: Average Michigan Car Accident Settlements