Lending Your Car? Know What You’re Getting Into.
This story starts with a phone call that all of us dreads: a loved one has been involved in a car accident. In this case, a client of mine, who also happens to be a serious car enthusiast, was vacationing in Florida when she got a call from the New York State Police that her new and much loved (and supposedly safely stored for the winter at her home in NY) Porsche 911 Turbo had been involved in a one car accident, and was totaled; and that the driver and passenger had been hospitalized.
Immediately she inquired as to who the driver of the vehicle was, as it she had parked her car for the season. She assumed it had been stolen, as did the police, considering the weather in which it was wrecked and the wanton abandon with which it had apparently been driven. When the police gave her the name of the driver, though, she recognized it immediately – the driver was her longtime, live-in, very serious boyfriend. She knew he had returned to NY on business, but she also knew that he understood that the car was not his to use, particularly in winter and without permission. She did not recognize the name of the passenger – another woman. The trooper further explained that both driver and passenger were intoxicated, and that he felt excessive speed and drunkenness contributed to the accident.
This was all very hard to handle for my client, of course, and it came as more than a slight shock. Unfortunately, she had a very difficult choice to make, and it was on this matter that she sought my advice:
The police wanted to know if the boyfriend had been using the car with permission. If his use was not “authorized” by her, he would be charged with having stolen the vehicle, and would likely spend some time in jail, particularly in light of the other charges pending against him as a result of the accident (DWI, etc. ). In New York State, however, there is another implication to her answer to this question. New York is one of the states whose law embraces what is know as “vicarious liability”. This means that in the event a person is injured in an automobile accident due to the fault of the driver of a motor vehicle, the driver of the vehicle, and the vehicle’s owner (if they are different people) are jointly and severally liable for the damages to be paid to the injured party, any time the vehicle involved is used by the driver with the permission of the owner, regardless of whether the owner is in any way at fault in the accident. To prevent owners from being liable for the acts of thieves, vicarious liability does not apply to unauthorized operators.
The implication is clear: under the laws of New York State, if my client were to report to the police that her boyfriend had been using the car without her permission, he would likely go to jail. This was something that, as angry as she was about his infidelity, she hoped to avoid. In the alternative, though, if she told them he had been using it with her permission and consent, whether actual or implied, he might avoid jail time, but she would be liable for the injuries to the passenger, as well as for any property damage caused in the accident. Not many tougher choices exist.
Ultimately, I advised her, as was my duty, that she had to tell the absolute truth, come what may. In this case, it was that her boyfriend was absolutely using the Porsche without permission. As a result he would have to pay for his crime, but she would not subject herself to a large lawsuit from the grievously injured woman.
This is a pretty tragic case, but it illustrates a very important point. If you live in a state with vicarious liability laws, every time you decide to share your toys with friends, or to help a newcomer join the hobby by extending the offer of a quick drive, you will be jointly and severally liable to any party who may be injured by your vehicle. Further, it means that if the injury is catastrophic, you will be personally liable, equally with the driver, for the amount that is above that which is paid by your auto insurance. Even if the driver has insurance, the owners’ policy is generally first in order of priority and, if the injuries are severe, the combined limit of both policies may be inadequate. Based on this, it is clear that enthusiasts should carefully weigh the possibility of personal liability before loaning out a vehicle.
Additionally, it is a good idea for all enthusiasts with any sort of positive net worth to carry at least one million dollars in extra liability coverage in a personal umbrella policy. These policies are surprisingly inexpensive and can provide significant piece of mind.
Alexander Leventhal is a car collector and attorney in New York. His comments here are not a substitute for consultation with an attorney.