What Happens If Someone Else Is Driving My Car and Has an Accident in California?

If you lend your car to a friend or family member and they get into an accident, you might be wondering who is responsible for the damages and how insurance coverage applies. In California, liability largely depends on the circumstances of the accident, the driver’s permission, and the type of insurance coverage in place.

Understanding Liability When Someone Else Crashes Your Car

Permissive vs. Non-Permissive Use

• Permissive Use: If you gave explicit or implied permission for someone to drive your car, your insurance policy will generally cover the damages, subject to policy limits. However, some policies may offer reduced coverage for permissive drivers, so it’s essential to review your policy details.
• Non-Permissive Use: If someone takes your car without permission and causes an accident, your insurance may not be responsible for covering damages. Instead, the driver’s insurance (if they have one) would typically be the primary source of coverage.

Primary vs. Secondary Insurance Coverage

California follows the “primary insurance follows the car” rule, meaning the car owner’s insurance is usually the first to pay for damages. If the damages exceed the policy limits, the driver’s insurance may provide secondary coverage.

Example: If your friend causes an accident while driving your car with permission, your insurance will cover damages up to your policy limit. If the damages exceed this limit, their personal auto insurance (if they have one) may cover the remaining costs. To better understand how insurance claims and coverage limits work, read our guide on Understanding Your Rights and Recovery Options After a Rear-End Collision.

Differences Between Personal vs. Commercial Vehicles

When it comes to accidents involving personal versus commercial vehicles, the liability rules can differ significantly. If someone borrows a company car and gets into an accident, responsibility depends on several factors:

Who Owns the Vehicle?

• Personal Vehicles: If an individual lends their personally owned vehicle to another driver, the owner’s insurance is typically primary.
• Commercial Vehicles: If the car belongs to a business, the company’s commercial auto insurance policy will usually provide coverage for accidents that occur during business use.

Was the Vehicle Being Used for Business Purposes?

• If the driver was using the company car for work-related activities at the time of the accident, the company’s insurance will generally cover damages.
• If the driver was using the company car for personal errands outside of work, they may be personally liable, and their own auto insurance may be required to cover the damages.

Employee vs. Non-Employee Driver

• Employee: If an employee crashes a company car while performing job duties, the employer is typically responsible under the doctrine of “vicarious liability.”
• Non-Employee: If a friend or unauthorized individual borrows a company car and gets into an accident, the company’s insurance may not cover the damages, leaving the driver personally liable.

Steps to Take After an Accident Involving a Commercial Vehicle

1. Notify the Employer or Business Owner – Report the accident to the company that owns the vehicle.
2. Contact Insurance Providers – Determine whether the company’s commercial auto policy or the driver’s personal policy applies.
3. Document the Incident – Collect details, take photos, and obtain statements from witnesses.
4. Consult a Lawyer – Legal guidance is especially important in commercial vehicle accidents due to potential liability complications.

If you need to report an accident, make sure to follow the Essential Steps to Report an Accident to Police, which will help you handle the situation correctly.

Special Cases That Affect Liability

• Excluded Drivers: If the person driving your car was explicitly excluded from your insurance policy, your insurance will likely deny coverage. In this case, the driver’s own insurance (if applicable) would be responsible, or you might be personally liable for damages.
• Unlicensed or Intoxicated Drivers: If you knowingly allow an unlicensed or intoxicated person to drive your car and they cause an accident, you may be held personally liable for damages. In some cases, your insurer may deny the claim entirely.
• Rental or Borrowed Cars: If you borrowed a car and got into an accident, the same rules generally apply: the vehicle owner’s insurance is primary, followed by the driver’s insurance if additional coverage is needed.

How Different Types of Accidents Affect Coverage

• Multiple-Vehicle Accidents: Explain how fault is divided and how coverage is determined.
• Single-Car Accidents: What if the driver hits a pole or a parked car?
• Hit-and-Run: What if the driver of your car is hit by an uninsured driver?

Case Studies

Scenario 1: A Friend Borrows Your Car and Rear-Ends Another Vehicle

• Situation: John lends his car to his friend Mike, who accidentally rear-ends another vehicle at a stoplight. The accident causes moderate damage to both cars.
• Liability Outcome: Since John gave Mike permission to drive his car, John’s insurance is the primary coverage for damages. If the cost of repairs and medical expenses exceeds John’s policy limits, Mike’s insurance (if applicable) may cover the remaining amount. If Mike is uninsured, John may have to cover the remaining expenses out of pocket.

Scenario 2: A Family Member Drives Without Permission and Causes an Accident

• Situation: Sarah’s teenage son, Alex, takes her car without asking and crashes into a parked vehicle. The owner of the damaged vehicle files a claim for damages.
• Liability Outcome: Since Alex did not have permission to drive, Sarah’s insurance may not cover the accident. The responsibility for damages may fall on Alex’s own insurance policy (if he has one), or Sarah may have to pay for damages personally. If the insurance company denies coverage, legal action may follow.

Scenario 3: An Employee Crashes a Company Vehicle While Running Personal Errands

• Situation: David, a delivery driver, takes his company’s van to pick up groceries after work. On the way, he runs a red light and collides with another vehicle.
• Liability Outcome: Since David was using the company vehicle for personal reasons, the employer’s commercial insurance may not cover the accident. Instead, David’s personal auto insurance may be required to cover damages. If he doesn’t have insurance, he could be held personally responsible for all costs.

Steps to Take If Someone Crashes Your Car

1. Ensure Everyone’s Safety – Check for injuries and call emergency services if necessary.
2. Exchange Information – Get the other party’s insurance details, contact information, and take photos of the accident scene.
3. Report the Accident – Notify your insurance provider and provide details about who was driving and what happened.
4. Consult a Lawyer – If the accident involves serious injuries or liability disputes, seeking legal guidance can protect your rights and financial interests.

Common Insurance Pitfalls and Mistakes to Avoid

Navigating auto insurance can be complex, and even small mistakes can lead to costly consequences. Here are some common insurance pitfalls that vehicle owners should avoid:

1. Failing to List Frequent Drivers on Your Policy: One of the biggest mistakes people make is not listing all regular drivers on their insurance policy. If a friend, family member, or roommate frequently uses your car but isn’t listed, your insurer might deny coverage if they cause an accident. Always update your policy to reflect who drives your vehicle regularly.

2. Misunderstanding Liability Coverage Limits: Many drivers assume their liability coverage will fully protect them in an accident, but policies have limits. If damages exceed those limits, you may be personally responsible for the remaining costs. To avoid financial risk, ensure your liability coverage is adequate, especially in high-cost accident scenarios involving medical bills and property damage.

3. Assuming Comprehensive and Collision Cover All Situations: Comprehensive and collision coverage help with vehicle repairs, but they don’t cover everything. For example, these policies may not cover damage caused by uninsured drivers unless you have uninsured motorist property damage coverage. Reviewing your policy details can prevent surprises after an accident.

4. Letting Your Insurance Lapse: Even a brief lapse in insurance coverage can have serious consequences. If an accident occurs during a gap in coverage, you’ll be personally responsible for all damages. Additionally, insurance companies may charge higher premiums when reinstating a lapsed policy. Always ensure timely payments to keep your coverage active.

5. Relying Solely on the Other Driver’s Insurance in an Accident: Some drivers assume they don’t need higher coverage because they can rely on the at-fault party’s insurance after an accident. However, if the other driver is uninsured or underinsured, you might be left paying out of pocket. Uninsured/underinsured motorist coverage can provide essential protection in these situations.

6. Overlooking Rental Car Coverage and Exclusions: If you frequently rent cars, don’t assume your personal auto insurance will fully cover rental damages. Some policies exclude rental cars or offer limited coverage. Checking your policy or purchasing rental insurance can help prevent unexpected expenses.

7. Not Reviewing Policy Terms and Exclusions: Insurance policies contain specific exclusions that may limit coverage. For instance, some policies won’t cover accidents if the driver was engaged in illegal activity or using the vehicle for commercial purposes. Regularly reviewing your policy and discussing coverage with your insurer can help avoid costly misunderstandings.

Avoiding these common mistakes can save you money and ensure you’re properly covered when you need it most. For more details on avoiding costly insurance mistakes, check out our Top Mistakes to Avoid After a Car Accident guide. Consulting with an experienced attorney or insurance professional can provide valuable clarity if you’re unsure about your policy’s details.

How an Attorney Can Help You

Determining liability in these situations can be complicated, especially if insurance companies try to deny coverage. A skilled personal injury attorney can help navigate the claims process, negotiate with insurers, and ensure you receive fair compensation for damages. If your car was involved in an accident while someone else was driving, contact Oracle Law Firm | Accident & Injury Attorneys for a free consultation. We can help clarify your rights and guide you through the legal process to protect your financial well-being.

Frequently Asked Questions