Are you responsible for an accident if you own the car?

Answer

Mostly it depends on the responsibility laws in your state, and whether or not you're required to carry liability insurance on the car. Either way, you're playing a dangerous game. Since consideration has been made (i.e., money has changed hands) to sell/buy the car, your insurance company could consider the vehicle sold and thus deny coverage on your policy (Why? Because the premium you pay is based on you as the driver, not the "unknown quantity" that is your friend. Your insurance company could also claim material misrepresentation, in that you didn't add your friend to your policy or purposely kept her off the policy while knowing she was using the vehicle on a regular basis). If you don't carry insurance, you'd better believe that an injured party's attorney is going to come after you -- as the vehicle owner -- if/when your friend wrecks the car. I've seen lots of these types of arrangements. Usually they work just fine, but when an accident occurs, watch out!

Answer

Beyond insurance, this set-up can cause real legal problems for you. You are basically selling property that you do not own and you can bet the bank will take a very dim view of this. You probably haven't crossed the line yet, since the bank is still getting the money that they are entitled to and therefore have not sustained any losses. But you are in such a small grey area that it would be wise to get out now.

First answer by anonymous. Last edit by Shelly W.. Question popularity: 183 [recommend question]

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