You and three of your best friends are headed to the Texas Hill country for a weekend to get away and catch up with each other. You’ve been looking forward to it for weeks! It’s been a very long week with late nights to wrap up a project before heading out of town and you’re tired. You ask one of your friends to drive your car while you rest. They accidentally clip another car while passing. No one got hurt, but it’s your friend’s fault and your car.
You own a pickup truck which makes you very popular with anyone who knows you when they move or need to pick up a new piece of furniture from Ikea. The truck’s loaded, but they bump a SUV behind them when they back out. Again, no one got hurt, but it’s their fault and your truck.
The good news in both of these scenarios, is no one got hurt. The bad news in both cases, is the friend has had an accident which is their fault and it happened while they were driving your car or truck. No one plans to have an accident. Anyone would feel horrible and offer to pay for the repairs or file the claim on their insurance.
The question I’m asked is, whose car insurance will pay for the repairs? It won’t be your friend’s, the claim will be paid by your car insurance company. Texas insurance law approaches cases like these based on the concept of insurable interest which is largely determined by the ownership of the insured vehicle. Since you own your car or truck, you have the insurable interest, not your friend.
Whenever anyone gives a friend permission to drive our car, truck, or SUV, who’s not listed on our car insurance policy, they are referred to as a “permissive driver.” Since the insurable interest is not transferred to a permissive driver, it is ultimately the vehicle owner’s car insurance policy that pays for the claim.
There are a couple of downsides when a friend wrecks your car or truck including:
- Your car insurance could cost more when it renews due to the claim.
- Your vehicle could lose some of its resale value due to it being in an accident even with an excellent repair.
- You and your friend could be sued by the other party that was hit if someone’s hurt.
- Your insurance company could subrogate against your friend, meaning pursue the friend to pay the insurance company for the claim they paid.
All these possible outcomes could strain a good friendship too. With this in mind, think carefully about the risk that’s involved before handing the keys of your car or truck over to a friend and determine whether or not you can live with something that could go wrong. There’s a good chance nothing will happen, but if it did, how will it impact you?
Do you have a question, comment, or experience you’d like to share with us? Post it in the comments section of our blog or on our Google + and Facebook pages. I’d love to hear from you!