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Would I be accepting financial liability—beyond the value of the vehicle—if I allow a relative to be the primary driver for a car that I own? This is assuming that the relative has car insurance covering his use of the vehicle. Would I carry some liability in the event of a car accident, for instance?

(In fact, I am the relative; but I thought it made more sense to ask the question this way.)

Edit: The car would be used mostly in Illinois. Depending on the relative, it could be registered in Illinois, Pennsylvania, South Carolina, or Florida.

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    No one can possibly answer this question unless you tell us what legal jurisdiction you live in. – Mike Scott Mar 20 '18 at 8:17
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I actually have some first hand experience with this situation in Illinois.

A few years ago I let a relative borrow my car for an hour or so in the Chicago area. They proceeded to cause an accident damaging both my car and an expensive Mercedes. Although the driver of my car was listed on the police report as the at-fault driver, they were responsible for absolutely $0 of the damages to either car. It all came back to me and my insurance company.

Now I fought this hard, and did my research. In Illinois at least it seems the driver is irrelevant. All insurance claims will first come to anyone who carries insurance for the vehicle, followed by the actual owner of the car.

I agree with Pete's answer (as usual) but your plan to have the driver insure the vehicle is a good start and should cover most of your bases. That said, I can imagine a situation where as the owner, you may be on the hook financially.

  • How can I know whether insurance would cover it, or if it still might come back to me as the owner? Are you thinking of some really nasty situation where (I don't know) punitive damages were awarded in a car case? – adam.baker Mar 20 '18 at 14:54
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    When thinking about liability and car insurance, I always try to imagine the worst possible situation. Say your relative gets in a terrible accident and injures or kills multiple people. This will lead to millions of dollars being owed for damages. Once the drivers insurance company is tapped out, or the driver is now bankrupt, it is not that far-fetched to imagine a lawsuit aimed at you the owner. – Helpful Friend Mar 20 '18 at 15:00
  • You may get a more concrete answer or solution on the Law stack exchange since we aren't really talking about personal finance anymore. – Helpful Friend Mar 20 '18 at 15:01
  • Adding another case for umbrella insurance. – Pete B. Mar 20 '18 at 16:11
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I will say most likely yes (jurisdiction dependent). In the US anyone can sue anyone for anything and as such there is a clear link that can be made between you and the person that owns the car. If you hurt someone with the car, the liability could fall upon the owner.

This is the case of a young adult that lives at home with their parents. The young adult can own their own car, have car insurance in their name, be over 21, etc... However, the parents can be held liable for the actions of that young adult depending upon certain situations.

So to be on the safe side, I would consider the answer to this question as a "Yes".

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