Who hasn't loaned their car to a friend or maybe borrowed a car from their friends or parents at some time in their lives? As you can imagine, this happens daily. In fact, I remember once being warned not to loan my car to anyone because if they got in an accident, my insurance company may not cover the damages because my friend was not on my insurance policy. However, under Colorado law, this is simply a myth.
As a general rule, Colorado law requires drivers to carry a minimum amount of insurance coverage. The public policy behind this regulation is that car accident victims should be fully compensated for their injuries. I think we can all agree that this makes sense. But the question of whether your insurance policy covers damages in an accident when you loan your vehicle to someone else depends on whether the driver was a “permissive user” of your vehicle when the accident occurred. The leading authority on this topic was set-forth by the Colorado Supreme Court in the case of Wiglesworth v. Farmers Insurance Exchange (1996).
In Wiglesworth, the plaintiff (Wiglesworth) was living with his friend's family. The family was generous enough to allow Wiglesworth to use their truck for the sole purpose of traveling to and from work. Unfortunately, Wiglesworth took the truck one day pretending to go to work when, in fact, he went to participate in a drag race. And of course, during the drag race, Wiglesworth caused a car accident.
The family's insurance company, Farmers Insurance Exchange (Farmers), refused to pay for the damages Wiglesworth caused claiming that Wiglesworth was not a permissive user of the truck because he was not going to or coming from work when the accident occurred. However, the Colorado Supreme Court disagreed and found Wiglesworth to be a permissive user.
The Court explained that although Wiglesworth was only supposed to use the truck for work purposes, he was still a permissive user because he did not steal the truck. Because Wiglesworth had permission to use the truck from the family, he was still covered by the Farmers insurance policy. This legal precept is now known as the Initial Permission Rule.
Under the initial permission rule, as long as the owner of the vehicle knows that their car will be driven on public roadways by the person to whom they loaned the car to, then the driver is considered a permissive user and covered by the vehicle owner's insurance policy. This is usually also true if the driver to whom you loan your car then loans the car to someone else (even without your knowledge).
Due to the initial permission rule, you should always be cautious when loaning your vehicle to someone else. If they cause an accident, then you and/or your insurance company will be liable for the damages.
However, if you or someone you loaned your car to is in an accident, it is always best to hire an attorney to represent you – especially if there are injuries involved. An attorney can help you to maximize your recovery and better defend you against liability if you or the permissive user of your vehicle is at fault.
If you or a family member has been injured in a car accident, call the personal injury attorneys at the Law Office of Jeremy Rosenthal. Our experienced attorneys can help you and your family recover following an accident by working to get you the compensation you deserve. Contact us today for a free consultation at (303) 647-4511 or visit us online.