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When your friend crashes your car: The rules of auto liability

Read the Spanish version: Cuando un amigo tiene un accidente con tu carro: Normas de responsabilidad civil con automóviles

If you drive your car and cause an accident, your insurance will pay for the damages you cause, as defined in your policy. If your friend crashes your car, you may assume that he -- and his car insurance -- will pay for damages. In fact, you are on the hook. Here are a number of accident scenarios and what you can expect to happen.

Scenario No. 1: Your friend drives your car and causes an accident with minimal damage.

If you loan your car to a friend, he causes an accident and both of you have car insurance, your insurance will pay and you'll have to pay your deductible. The reason? Your auto insurance policy insures your vehicle plus you, any relative or anyone else who uses your car, if the use reasonably is believed to be with your consent.

Scenario No. 2: Your insured friend drives your car and causes an accident with a lot of damage.

Let's say the accident your friend causes results in serious bodily injury to others and property damage. Liability coverage consists of two parts: bodily injury liability and physical damage liability. The driver's policy covers the driver and all passengers in the vehicle for bodily injury. The car owner's liability covers property damage caused by his or her car. Liability insurance also covers the cost of your legal fees in the event that you are sued.

But if the damage exceeds your insurance liability limits, the courts can attach your personal assets, such as your home, to recover damages. Liability coverage won't pay for damages beyond the limit for which you are insured.

Cases in which you and your friend share the cost of the accident are known as "pro rata." If your friend was at fault, your insurance companies can share the cost. For example, say your friend causes $11,000 in property damage while driving your car. You have $25,000 in property damage coverage and your friend has $15,000; total coverage is $40,000. You and your friend may share the cost proportionally. Initially, your insurance would likely pay the full cost of the accident. It would then seek compensation from your friend's insurer to recover his or her share.

Scenario No. 3: Your uninsured friend drives your car and causes a lot of damage.

Lending your car to an uninsured friend can land you in a world of hurt. In this case, your uninsured friend has put you in a really bad spot. If the damage your friend causes exceeds your policy limits, the injured party can come after you for medical and property-damage expenses.

Scenario No. 4: Your friend drives your car without your permission and crashes it.

You're not likely to be held accountable for the damages because your friend borrowed your vehicle without your knowledge. In this case, your friend's insurance (assuming he or she has it) will kick in first. If your friend isn't covered, you'll probably need to use your collision insurance to cover the damages to your own vehicle and your liability insurance would cover damage to others' property. Bear in mind that insurance companies will assume a friend has permission to use your car unless there are clear indications that you denied permission, such as a drunken friend who drives away in your car without your knowledge.

Scenario No. 5: Your car is stolen and then crashed.

If the thief crashes into someone or something, you won't be held responsible for the damages done to other people and their property, but you probably will have to use your collision insurance to pay for the damage to your car. Don't count on the thief having auto insurance, let alone enough money to spring for repairs and medical expenses. Even if the thief has insurance, his company won't pay for his criminal act.

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