Yes, it is called "negligent entrustment." If the owner loans a car to another person, and knows or has reason to know the driver is a bad driver, the owner can be held liable. Does your cousin have insurance?
The owner can be held liable. Please, always get insurance. Have everyone in your family get at least100/300/100 coverage to protect yourself and your assets.
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The cousin needs to check into the history of the prior case. "The case was dropped when the driver who was suing didn't show up to court." If the case was dismissed with prejudice, the driver likely cannot sue again. If the sister cousin is to be sued, she likely should have been named as a defendant in the first case. (The court might not have dismissed the case with prejudice if the plaintiff simply was not showing up. But if your other cousin knew what he was doing, he would have been the one writing the dismissal order that had the "with prejudice" language in the order.)
Also, depending on how long ago the incident was, the driver may be be barred by the statute of limitations. In WA, a person injured in a car accident generally has three years from the date of the accident to sue the persons allegedly causing the accident.
That your cousin "has no car insurance at this time" is not important if she had insurance coverage at the time of the accident. If she had insurance at the time but is no longer buying insurance, the insurer may still have a duty to take care of the case.
"she cannot afford a lawyer". Can she afford to have a judgment entered against her? Can she afford to have her driver's license suspended (for not having at least the minimum mandatory insurance coverage)?
Some attorneys offer unbundled services. Your cousin can hire an attorney for an hour or two to go review her details and let her know what major options she may have.
There are a lot of things to look at in this situation. But the most important is this: even if your cousin didn't have insurance, she is insured if her sister had insurance on the car. The insurance initially follows the car - not the driver. So if her sister had insurance, she needs to call her sister's insurer ASAP and report it.
If there was no insurance anywhere, her liability can be based - usually - on only one of three theories:
1. Negligent Entrustment - meaning that at the time your cousin's sister lent your cousin the car, the sister had reason to know that your cousin was incompetent, intoxicated, or otherwise incapable of safely driving.
2. Agency - meaning that at the time your cousin was in the accident, she was driving her sister's car for the benefit of her sister (e.g., she was running an errance for her sister; rather than just borrowing it for your cousin's own personal use).
3. Family Car Doctrine - this is a sub-set of Agency; it means that even though the car was owned by your cousin's sister, it was being provided to your cousin for general family purposes; and that it was routinely made available for family use. Typically, this doctrine is applied when a parent owns a car but allows a resident (usually, minor) child to drive it.
Absent one of these three situations, it is unlikely your cousin's sister has responsibility for the accident. I would suggest that if your cousin's sister gets sued - and if she doesn's have insurance, she wait until she gets sued, and then makes sure she responds in a timely manner. She can also check with local legal aid and see if they can be of assistance. Without proof of one of those 3 doctrines, it should be a relatively easy case to get thrown out of court.
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