Lending Out Your Vehicle: Understanding (And Avoiding) Negligent Entrustment Claims

Has anyone ever asked to borrow your car? If you paused to consider whether or not it was safe to do so (or just said "no"), you were being smart. If you loan out your car or truck (or motorcycle or boat) to someone who isn't qualified to use it, you could become liable for any injuries that he or she causes under the theory of "negligent entrustment." Here's what you should know in order to protect yourself.

When do you become liable for someone else's motor vehicle accident?

Most of the time, the law assigns responsibility for a negligent driver's accident directly to that driver. However, there are some exceptions. While state laws vary, you can expect that the issue will come up in a personal injury claim under certain circumstances:

  • If you loan your car to an employee who is running errands for you.
  • If your employee drives a company vehicle for work and is on the job when the accident occurs.
  • If you loan your car to a family member or friend who doesn't have a driver's license.
  • If you loan your car to someone who has a history of reckless driving and accidents.
  • If the person who borrows your car is sick, intoxicated, on certain medications, underage, or very elderly (because all of those things can cause delayed reaction times and impaired reasoning).

What can you do to reduce your liability?

Your liability will depend a lot on the circumstances of the case and what the plaintiff is able to prove in court. The laws of your particular state will also come into play. For example, in some states, the "family car doctrine" automatically confers responsibility for any accidents onto the parent or the head of a household when the whole family shares a vehicle.

The only truly safe way to avoid any liability is to refuse to lend out your vehicle -- no exceptions. If that's not possible for some reason, you can still reduce your risk by taking certain steps: 

  • Never hand over your car keys until you see the driver's license of the person who is going to be driving.
  • Make it clear that your permission is granted to only the one individual borrowing the vehicle.
  • Never loan your car to anyone that you personally know has a drug or alcohol problem. 
  • If you suspect that the person is too sick to be driving, is too inexperienced, or has slowed reaction times for any reason, consider offering to drive him or her instead.
  • Insist that the driver has his or her own insurance -- there's less incentive for a plaintiff to try to prove a case against you if the driver is insured.
  • Never allow an employee to take a company vehicle home after work or on weekends. That way you create a bright line between when the employee is on and off the clock.

If you do loan your vehicle out, and the driver gets into an accident, it's smart to talk with an attorney before you talk to anyone else, especially insurance adjustors or a plaintiff's attorney. You want to make sure that you understand your potential liability before you get put on record saying something that could be used against you later. For example, even a simple remark like "I thought he looked tired!" could be taken as proof that you "knew" someone who had your keys shouldn't have been driving. For more information, contact Owen Law Firm or a similar organization.