I am a cosigner on a car loan. The car was involved in an accident and driver of the vehicle was not insured. Am I liable?

Asked almost 5 years ago - Olympia, WA

I cosigned a car loan for my daughter. Both names showed on the registration. I insured the car to protect myself. She was excluded from the policy. She was at fault in an accident. The insurance company of the other vehicle has threatened to sue me to recover the cost of the damages. My daughter didn't have insurance and is unable to cover the cost of the damages. Can State Farm sue me for the damages even though it isn't my car and I didn't give my daughter permission to drive it without insurance?

Attorney answers (1)

  1. Lars A. Lundeen


    Contributor Level 20

    Answered . It is hard to understand why you would allow your daughter to drive a car in which she is not insured. That is being penny wise and pound foolish.

    You say that it "isn't my car", yet you appear to say you are a registered co-owner. If your name is on the title, its partly your car. Depending on the state where the accident occurred, an owner or co-owner of a vehicle can be responsible for damages caused by the vehicle in which you have an ownership interest.

    How is it that she was excluded from your policy? Why do you think you would need to give her permission to drive her own car, with or without insurance? If she is a co-owner on the title, she has a right to drive it.

    If you have not done so already, I suggest that you report this incident to your automobile liability insurance carrier and ask them to defend you against this claim from State Farm. If the basis of State Farm's allegations against you is solely based on ownership, you may have some coverage under your policy, even if your daughter is excluded from the policy.

    Is difficult to understand how you ever got in this situation. I suggest that you sit down with an independent insurance agent and discuss the type of coverage that you and your daughter need to have to protect both of you in the future.

    Legal Disclaimer:

    Mr. Lundeen is licensed to practice law in Florida and Vermont. The response herein is not legal advice and does not create an attorney/client relationship. The response is in the form of legal education and is intended to provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that, if known, could significantly change the reply and make it unsuitable. Mr. Lundeen strongly advises the questioner to confer with an attorney in your state in order to insure proper advice is received.

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