How do I legally loan my friend my car?
May 4, 2010 9:46 AM   Subscribe

How can I loan/lease a car to a friend for a short period of time without being liable if he/she gets in an accident?

YANML, but I'm leaving the country for three months and was planning on loaning one of my friends my car for the summer. I have car insurance and she has car insurance but it's on an International license. My parents are under the impression that since I am still a dependent (though I have my own insurance policy) and part of their household, a lawyer could ultimately hold them responsible for any injury or property damage. Is there some legal way to lease her the car for three months? She's actually doing me a favor, as I have a manual transmission car, and neither of my parents can drive stick, so it will sit outside for three months if I leave it with them. She will only be using it for short trips to get groceries, see movies, etc. This is also time sensitive, I leave in less than 3 weeks (parents ok'ed this two weeks ago and then changed their mind...)

Other relevant information:
Car and insurance policy are in New Jersey. My friend would be keeping the car in NJ as she's working here this summer.

My friend is also a native Trinidadian, so she has a Trinidadian license, as well as an International License that is still valid.

My car is worth less that $1500 dollars. I am completely okay with her having it, and I am the title holder/owner of the car.

I am still on a provisional NJ driver's license (would get a real one next month), but I'm over 21.
posted by pianohands to Law & Government (10 answers total)
Call your insurance agent. It's not a question of legality, it's a question of how your insurance policy works.
posted by fritley at 9:59 AM on May 4, 2010

Why don't you just sell it to her for $1500 with a handshake to buy it back in three months?
posted by glibhamdreck at 10:10 AM on May 4, 2010

In addition to insurance, I'd include a letter stating that your friend has permission to be driving the vehicle. (i.e. not stolen)
posted by hungrysquirrels at 10:12 AM on May 4, 2010

Why don't you just sell it to her for $1500 with a handshake to buy it back in three months?

Presumably because the taxes/fees associated with selling a vehicle and transferring the title are high.
posted by schmod at 10:20 AM on May 4, 2010 [1 favorite]

Taxes and fees probably cost much less than renting a car for three months.
posted by pickypicky at 10:48 AM on May 4, 2010

I don't know about your state, but, in Michigan, the OWNER of the car is ultimately responsible. If I lend my car to a friend, he kills someone, I can be sued for damages past the amount of any insurance I carry.

I doubt this liability would carry over to your parents since you're over 21 years of age.

Sell her the car, transfer the title to her name, purchase it back... the cost of fees will be minimal in comparison to the liability risk.

Or, let it sit, it will be fine sitting for three months, just run a little fuel stabilizer through the gas tank for a week or so just before you park it. You'll probably have to charge the battery when you return, but there shouldn't be any more damage..
posted by HuronBob at 10:58 AM on May 4, 2010

And, let me add, if you're living with your parents, and they are supporting you in any manner, my opinion is that you owe them the respect to understand their fears (true or not) and not create anxiety for them. If you can PROVE to them they aren't at risk, fine, but, if not, be respectful of their fears.
posted by HuronBob at 11:00 AM on May 4, 2010

First, have her find out what exactly is covered by her own insurance if she is driving someone else's car, including the maximums that the insurance would pay.

Second, find out if your insurance covers occasional drivers. I'm pretty sure most companies would not cover commercial use - so you want to leasing the car or otherwise charging her money. Some don't cover anyone except the named drivers so you need to know your own policy. I would ask your agent to send you a copy of the relevant section ("but he said it was covered" is not a good defense in a court of law. also, having a copy will help you understand what constitutes "occasional" use. I know that under my own policy, people visiting us for a few weeks are covered when they drive our car but we have a relatively comprehensive policy - not all of them are the same.
posted by metahawk at 1:43 PM on May 4, 2010

Please don't listen to the ideas that having insurance protects you... Yes, you have insurance, but I doubt you have more than 300k/100k liability insurance.. The cost of a wrongful death lawsuit could go into the millions...your insurance is worthless in that situation.

When my son was killed by a careless driver my attorney advised me that I could probably garnish the other drivers wages for the rest of his life (he was very young), and could possibly end up with every penny his parents had (they owned the vehicle)... I elected not to do either, nothing was to be served by ruining three other lives....

Don't be the person on the other end of that.... you friend can catch a ride to the movies...
posted by HuronBob at 2:15 PM on May 4, 2010 [2 favorites]

IAAL. The answer to your question is that you can't avoid liability. Car ownership and insurance laws are designed and intended to protect those who are injured.

One solution is to go to your insurance agent and add your friend to the policy as a permitted driver. This will certainly increase your premium, but you could insist that your friend pay the extra. You should also increase your liability insurance coverage to the maximum amount the insurer will well. Payouts usually fall within the basic amount, so the cost to increase the maximum is low. As HuronBob says, injury claims can run into the millions, but if you have maximum coverage, an injured person is more likely to accept a payout rather than suing.

Remember that if you sell your car, your friend will be legally required to buy liability insurance. If you want to be sure you get our car back in good shape, your friend should either be able to pay for any possible damage or buy collision and comprehensive coverage, which is not cheap and usually has a substantial deductible.
posted by KRS at 2:28 PM on May 4, 2010

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