Liabilities for loaning/renting out a car

May 13, 2005 10:10 AM

What legal issues exist for loaning out or perhaps even renting out a car that you own?

I have a vehicle that I may not be using for a few months. I've considered trying to rent its use for a low price or perhaps even simply lending it for free to someone in need. I'm concerned about liability issues, however. Am I, as the owner, responsible for damage/injury caused by the vehicle if someone else is driving it?

Can requiring a loanee to carry insurance or having them sign something indicating responsibility cover me?

Or would I just want to make sure I've got liability on the car myself, no matter what?

posted by wildblueyonder to travel & transportation (7 comments total)

In Michigan, the owner of the car is liable for any damage that is done with the car. If the driver hits/damages/injures/kills someone, expect to be sued, no matter what paperwork you have signed.

I wouldn't even consider it if I were you, you could lose everything you own and everything you will earn in the future.
posted by HuronBob at 10:20 AM on May 13, 2005

Florida also has vicarious liability. Your concerns are going to be completely a matter of state law so you are going to have to say where you are to get information even marginally pertinent.

Your desire to do something nice for someone in need is admirable but I suspect you're going to find just doing the research to determine your liability is going to make it not worth it.
posted by phearlez at 11:19 AM on May 13, 2005

I'm guessing the show stopper would be finding insurance.
posted by rolypolyman at 12:12 PM on May 13, 2005

I loan my car to friends. I always tell them explicitly that they are responsible for the steep deductible. I would not loan it to a stranger. Renting it is another matter, and likely to be a very bad idea.
posted by theora55 at 12:22 PM on May 13, 2005

This isn't an answer to your actual question, but an alternative--if you're not planning on driving the car at all--is dropping some of the insurance on it, which will save some money. You'd still want some insurance to cover the sort of damage that can happen to a car that's not being used, but you may be able to drop some of the insurance. (I'm not an insurance expert so I don't know which you'd need, but your agent should be able to help you out with that.) My brother and his wife have done this, as they're not using one of their two cars for a period of about a year.
posted by DevilsAdvocate at 12:25 PM on May 13, 2005

Renting your car for cash to someone else might even be prohibited by the terms of your policy. Check with your agent first.
posted by grouse at 11:22 PM on May 13, 2005

Following up on DevilsAdvocate's suggestion, you can go a step further by re-registering the vehicle as "planned non operation", which will reduce both your reg fees and insurance premiums. However, first discuss your intentions with your insurance broker and make him/her show you the exact section of the policy regarding lapsed or reduced coverage. After going PNO for a while, my longtime insurer tried to drastically raise the old rates when it was time to put the car back on the road. Something to do with being reclassified as a new policy, or uninsured driver, or somesuch nonsense. It was a while ago, so that last part is a little fuzzy.

Anyway, thankfully there did turn out to be a workaround that wasn't too painful. However, after the fact the insurer admitted there had been a very easy and cheap way to maintain normal insurability if I'd only known to ask upfront. So...just know to ask.

Talk to your insurer, and read your policy carefully, before you make any changes of insurance, driver, storage location, or anything else. Losing your insurance, or being drawn into anyone's claim/lawsuit (EVEN if you're ultimately successful in avoiding liability), for something as trivial as a few months' break from your car--that would truly suck. If anything goes wrong, it's your name on the title and your name on the insurance. You WILL be drawn into all messiness that ensues.
posted by nakedcodemonkey at 12:00 AM on May 14, 2005