Is an auto policyholder liable if a person on their policy causes a crash?

For many families, buying auto insurance for a family with multiple drivers makes sense. This is particularly true for parents with teen drivers. But what happens if someone wrecks a car in your name? Who will be responsible for an accident?

However, when one driver on the policy causes a crash, is the policyholder liable for the other driver’s negligence? More specifically, you may ask questions such as, “Am I liable if my spouse causes a car accident?, ” “Am I liable if my spouse gets a dui?,” or “Am I responsible for someone else driving my car?”

Unfortunately, determining the answer to these questions is not so cut and dried, as several factors may affect liability. At times, the fact is the policyholders are held responsible for any accident which occurs on their property.

Are you liable if a person on your insurance policy causes an accident?

So, if a named driver crashes, does it affect the policy holder? And if a named driver crashes, who is responsible? First and foremost, it is important to note that if a person on your policy causes an automobile accident, your policy should cover the cost of damages. In the best-case scenario, the cost of damages will not exceed the policy limits. However, if the value of damages does exceed the policy limits, then liability becomes an issue.

So, if a named driver has an accident, does it affect the policyholder? Who is liable in a car accident? Generally, the courts will not hold you accountable for the actions of other adult drivers on your policy. There’s a difference between the policy holder vs responsible party. So, if your spouse causes a crash and the damages exceed your policy limits, the other party can file a claim against them, not you — even if you are the policy holder.

However, say a teen driver causes a crash. Will the parent’s car insurance cover the damages? If you add your teenager to your policy, you may be liable for them. If the damages exceed the policy limits, then the parent becomes liable for the remaining damages. Once a teen is no longer underage by legal standards, though, the courts may let the parents off the hook for any damages a teen causes with their vehicle.

So if for example, you think, “my college student got in an accident with my car, what happens now?” If they were an unauthorized driver, the car accident will not be covered by your insurance. And in a worst case scenario, there could be a civil lawsuit after the car accident. When someone else causes an accident with your car, there are several factors to be considered.

What about extended family members? What if you let your elderly mother, a college-aged niece, or your child’s babysitter drive your car and have them listed on your policy? Who is liable for the damages any of these persons cause while driving your vehicle? There’s also the matter of where an accident takes place. Are parents liable for children’s car accidents in Texas? Am I liable if my spouse causes a car accident in Florida?

Unfortunately, this is where matters become complex. In determining liability for damages that exceed policy limits, the courts will consider factors such as age, relationship to you, residency, and the at-fault driver’s ability to satisfy a claim. That’s why when you ask, “if someone else crashes my car, am I liable?”, the answer isn’t exactly a simple yes or no.

How do state laws affect your insurance liability after a crash?

Who is responsible for an accident? Who will be held liable in case of a collision? Another way of asking that is who is liable in a car accident, the owner or the driver? The minimum car insurance required in each state is different. These state laws affect liability in a few ways. If you live in one of the 12 no-fault states, whose name is on your policy does not matter.

Each driver’s own policy covers the cost of medical expenses, lost wages, and funeral expenses that arise from a car accident, regardless of who was at fault. That is the case even if a named driver on a policy has an accident.

That’s why questions such as, “is Ohio a no fault state for car accidents?,” “What happens if someone else is driving my car and gets in an accident in Texas?,” “Can someone drive my car if they are not on my insurance in Illinois?,” and “What happens if the at-fault party doesn’t have enough insurance to pay your claim in North Carolina?” are so important to answer.

Only if the value of damages is excessive can the not-at-fault driver file a legal claim for additional damages. In this case, the driver would file a claim against the at-fault driver personally — not the owner of the policy attached to the car involved in the crash.

As for the cost of property damage in no-fault states, your own collision or comprehensive policy should kick in to pay for repairs. If your vehicle caused damage to the other vehicle, your liability policy would help pay for repairs — assuming, that is, that the at-fault driver is a named person on your policy.

In fault-based states, matters are not so simple. In these states, insurance companies only pay claims after they determine fault.

It’s also important to consider whether your state allows you to name additional people on your auto insurance policy. In all states, you can name your spouse and children, but some states draw the line there. Many states do not allow policyholders to name persons who do not live in the same household and/or who are not immediately related to them.

However, others are more liberal and allow policyholders to name extended family and even friends as insureds. The former states maintain strict laws to prevent liability issues. So that is another issue to be considered if someone drives your car and crashes.

What are permissive and non-permissive drivers on your policy?

Generally speaking, car insurance follows the car, not the driver. So what does that mean when answering, what happens if someone else is driving my car and gets in an accident? This means that if your car is involved in a car crash, your insurance will kick in to cover the cost of damages, so long as the at-fault driver had permission to use your vehicle. If you wreck someone else’s car, and you didn’t have permission to drive it, you could face severe consequences.

A permissive driver is any person who is listed on your policy and/or any person to whom you gave express permission to drive your vehicle. If the permissive driver is not a person listed on your policy, your policy should still cover the cost of damages up to the limits. If damages exceed the limits, the permissive driver may have to rely on their own coverage to cover the remaining costs, even if the permissive use driver was at fault for the accident.

However, if the permissive driver does not have auto insurance, you may assume financial liability for the remainder of the costs. Keep that in mind if you end up in a situation where you have to ask, “My son crashed my car and is not on insurance. What happens?” You can also find out specific requirements for permissive drivers such as learning the answer to questions like, “What is permissive use in Illinois?”

Non-Permissive Use

What happens if a driver is not listed on an insurance policy? When a person who does not have your permission to use your vehicle causes an accident in it, it is unlikely that your insurance policy will cover the cost of damages. Non-permissive use of your vehicle can occur in one of three ways:

• You do not give a driver permission to use your vehicle. If you did not give the at-fault driver permission to use your vehicle, they may have to file a claim against their own insurance policy. However, if the at-fault driver does not have insurance, you may be liable for damages.
• The at-fault driver is an “excluded driver.” If the at-fault driver is a person whom your insurer excluded from your policy for any reason, your insurance will not cover the cost of damages they caused to your vehicle. This is the case even if you gave the excluded driver permission to use your vehicle. You may need to check state specific laws such as what happens to an excluded driver at fault in Texas.
• The at-fault driver was under the influence or unlicensed. If you gave someone permission to use your vehicle and then they caused an accident while under the influence and/or while unlicensed, your insurance will not pay for damages. This is because driving while under the influence or without a license is a violation of any auto insurance policy.

Your Liability When a Person On Your Policy Causes a Crash

Being a policyholder comes with great responsibility and possible liability concerns. It is important to understand when you may or may not assume liability for damages other drivers cause in your vehicle before allowing anyone to use it. If someone drives your car and crashes, are you liable? if someone else drives your car and gets in an accident, are you responsible? Possibly.

Make sure you understand the ramifications of letting other people use your vehicle before loaning it out.