Borrowed Car Accidents: Who Pays?

By FindLaw Staff | Legally reviewed by Robert Rafii, Esq. | Last reviewed January 31, 2023

You love borrowing your sister's sports car. It's so much faster than your reliable but boring commuter hybrid. She doesn't need to worry about an accident because you are always careful and have full coverage insurance, right? Except this time your history of defensive driving didn't work out. You were involved in a three-car collision and her sports car was totaled. You might be wondering who pays in a borrowed car accident scenario. The simple answer in most states is: let's hope your sister has an excellent car insurance policy.

Car Insurance Follows the Car, Not the Driver

There is a popular myth out there that the car insurance attaches to the driver. In fact, the opposite is true. As long the owner of the car has coverage, generally speaking, it will follow the car in most situations. The owner's car insurance is the primary coverage that would apply if a crash occurred. The driver's insurance would act as secondary insurance if necessary.

Keep in mind that insurance matters are typically covered by state law, so be sure to check with your local jurisdiction's Department of Insurance to learn more.

Keeping with the above example, if your sister has adequate coverage and you were the cause of the accident due to negligence or some other reason, your sister's liability coverage would pay for the other driver's damage and possibly injuries up to the policy limit. Your sister would file the claim and be responsible for any resulting deductible. If her coverage isn't enough, that's where yours might cover the rest (assuming you have insurance).

Excluded Drivers

There are two main scenarios where the owner of the vehicle may not be liable for damages caused by a driver of a borrowed vehicle:

The driver is specifically excluded on the insurance policy
The driver took the car without the owner's permission (and got into an accident)

Let's start with the first case: an excluded person named on the policy gets into an accident in your car. When you initially apply for car insurance, you are asked to list everyone in your household. Some car insurance policies cover every household member, while others may only cover licensed members. Why would a person be excluded from an insurance policy? Perhaps they have a poor driving record or a prior driving under the influence (DUI) conviction and including them jacks up your insurance premium rates.

Some states, such as Michigan and New York, don't allow for excluded drivers. In most cases, however, if the excluded driver gets into an accident in your car, they will become liable for any resulting damages.

If you take your sister's car for a joyride without her permission and get into an accident, she likely won't be held liable for your criminal actions. However, if your sister allows you to borrow her car and she is aware you are intoxicated by drugs, alcohol, or a combination of both, she may become liable both civilly and criminally. If your sister knowingly allows an unlicensed driver to take the wheel of her car and that person gets into an accident, she will also likely be held liable.