• Brad Keating

Borrowed Car Accident, No Insurance - Who Pays and What Could Happen?

Updated: Feb 23

Getting into a car accident in a borrowed car is scary. Generally, the insurance policy covers any damages, especially when the defensive driving techniques failed, and the person was in an accident. However, what happens if there is no insurance policy on the borrowed vehicle and the driver is in an accident? Things can get confusing quickly.


Car Insurance Doesn't Follow the Driver

Car Insurance Doesn't Follow the Driver


People incorrectly believe that the driver's insurance company follows the driver of any vehicle, but the opposite is often true. If the car owner has coverage, it follows the car. They have primary coverage, but the other driver's insurance is secondary coverage if needed.

If the other drivers have insurance, but the owner doesn't, they may have to pay everything out of pocket for injuries and damages to both vehicles and both parties.


However, those who do have insurance may have a lower policy limit. The other driver (who borrowed the car) may have to cover the rest.


Excluded Drivers


There are two scenarios where the vehicle owner might not be held liable for the damages caused when the borrowed vehicle was in the accident:

  1. The driver didn't get permission.

  2. The driver was specifically excluded from the insurance coverage.

People can be excluded from policies if they have a DUI conviction, poor driving record, or aren't eligible for a driver's license. Therefore, the excluded party is often held liable for the damages.


If the borrower didn't get permission, this is stealing. Therefore, the owner isn't likely to be required to pay for those criminal actions. However, if the owner knew about it and also was aware that the driver was intoxicated by drugs or alcohol, both parties could be held liable criminally and civilly. It's best to speak with vehicle accident attorneys in Nashville if that's the case.


No Insurance Coverage from a Car Insurance Company - Who Pays?


Most states claim it's illegal to drive a vehicle without auto insurance. However, what happens when the driver wasn't the owner, and the accident caused severe damage to the property or body of the other driver?


This happens frequently, and many times, the owner of the vehicle had no policy with an insurance company or let it lapse. They could face a loss of their driver's license, fines, or jail time. With that, they are still responsible for any property damage or medical bills that the person caused while borrowing the car.


In general, if someone causes a car accident and has no insurance on the car, they must pay for their vehicle's damage themselves. However, the other driver may also sue for injuries and damages caused to them. An example would be when the victim's back hurts after a car accident.


Some people try to buy car insurance the very next day, but that policy isn't likely to apply to the previous accident.


Since there is insurance to cover the damages, the owner of the vehicle is likely considered at fault. However, if they don't have the means to pay, the victim may come after the driver of the borrowed car, as well.


Overall, the outlook is a bit better if the other party hits the driver of the borrowed vehicle since the at-fault driver is responsible for any damages done in a car accident. However, state laws often limit the expenses the victim can recoup if they were driving without insurance.


Someone Else Caused It

People with no insurance might be limited by the other driver's insurance as to what they can sue for. Some states use the no pay, no play system, so uninsured drivers can't sue for damages without a specific dollar amount. That includes mental suffering, emotional distress, and physical pain. They may also have higher deductibles for vehicle repairs before the at-fault party is sued for damages.


However, Illinois is a fault state, which indicates that a person has the right to sue after being in an accident, even if they were partially to blame. The same rules apply, meaning the at-fault driver may not have to pay as much compensation because the vehicle owner had no insurance at the time.


The Driver of the Borrowed Car Causes It

Many times, the driver causing the accident uses their insurance company to cover the injury and damage costs to victims. However, if the friend's insurance lapsed or was never purchased, the victim of the crash could sue the vehicle's owner or the driver.


It is still the financial responsibility of the vehicle owner to pay compensation awarded to the victim. The at-fault driver had borrowed the car and may have been performing reckless driving tactics. They are supposed to be a responsible driver at all times and didn't do what they should have done by paying attention.


Though most people feel that the driver should be liable for damages, they may have car insurance coverage for their own vehicle and expected the owner to do the same. Therefore, it's not their responsibility to pay.


Driver Uses Their Own Insurance Company for Restitution

However, the driver of the borrowed car could choose to pay compensation through their insurance policy. The uninsured driver might be off the hook for any restitution here but may still face fines and other problems because they carried no insurance on their vehicle.


Still, some insurance companies don't allow their clients to cover damages and expenses if their vehicle wasn't in the accident. Therefore, it depends on the policy and many other factors.


Auto Insurance and a Valid Driver's License


Generally, every state requires a driver to have auto insurance to prove that they may take financial responsibility if they cause the crash. Though insurance is the best option, some states do allow cash or bond deposits.


That way, it assures that other motorists are protected because the owner has liability insurance and can prove it with an insurance card.


Other Issues about No Car Insurance Accidents

Other Issues about No Car Insurance Accidents


Those without insurance run the risk of getting into an accident and having to spend money out of pocket to cover the restitution if they're sued. However, that's not the only problem with having no coverage. Here are a few other things to ponder:


Fines and Jail Time

The states that require auto insurance are likely to use fines or jail to make sure that drivers have appropriate bodily injury coverage. Therefore, the at-fault party might be paying high fees to keep their license. If the state or court feels that a fine isn't enough, it could request that the person go to trial and face jail. This often happens when their negligence is severe, and they were aware of their actions. They knew they had no liability coverage and let someone drive anyway.


In this case, it's best to speak with an attorney to find out what courses of action are available based on the circumstances.


Not Giving Permission for Someone to Borrow the Car

If the vehicle owner never gave permission to the family member, then they shouldn't have borrowed the car, and it could be seen as theft.


Letting a family member or friend borrow a car is a big deal. It shouldn't be taken lightly. Therefore, it's crucial to check and make sure that there's insurance. Understand that if they get into a car crash, the fault often lies with the owner and not the driver.


At-fault States vs. No-fault States

A no-fault state law means that injured victims must file claims with their insurance company to pay medical bills and the like. Therefore, if the owner doesn't have car insurance, they could only be sued by the driver if they were injured and had permission to take the vehicle.

Illinois is an at-fault state. Therefore, the at-fault driver's insurance covers the other party's bills. However, if the victim was 51 percent responsible for the accident, this doesn't apply.


Higher Car Insurance Rates

Getting into a motor vehicle accident with auto insurance means high fines for the owner. They're more likely to get car insurance, so that doesn't happen again. However, insurers have ways to look up accident information and can use that to raise rates. Therefore, the person must pay more to insure their vehicle; if they had insurance in the beginning, that might not have happened.


Still, many companies use accidents as a way to raise rates, too.


License Suspension

Most states are lenient for first-time offenders when it comes to driving without insurance. However, the court could take away the owner's driver's license because they had no protection. That's on top of the fines and potential jail time they might face.


Generally, the court doesn't suspend the driver's license unless they were intoxicated or were reckless. If that happens, it's likely because of the criminal aspect instead of the borrowed car not being insured.


Hire an Experienced Lawyer from the Keating Law Firm


A car accident is a complicated situation, especially when it involves borrowing another person's property. Though the insurance goes with the car, there may be no insurance at all. Therefore, it's best to speak with a personal injury attorney from the Keating Law Firm. Request a free case evaluation to find out how to minimize costs and not lose driving privileges. They can also help understand cases like being sued for a car accident and knowing what can the victim can take.