Liability of a Car Owner for Damages Caused by a Permissive Driver
You let your friend borrow your car to run an errand. During the course of his trip, he causes an accident and someone is injured. Are you responsible for the damages caused by your friend?
California's Permissive User StatuteUnder California's permissive-user statute, the liability of an owner is capped: Permissive use liability cannot exceed $15,000 per injury, $30,000 per occurrence, and $5,000 for property damage; nor can the driver's punitive damages liability be imputed to the owner. (California Vehicle Code section 17151; see also California Vehicle Code section 17155 - total $30,000.00 policy limits.) Under the statute, permissive use liability is secondary to operator liability. The purpose of owner permissive use liability is to guaranty, to a third party injured by the operator's negligence, at least the minimum recovery required by the Financial Responsibility Law. Under settled California law, where the operator settles the third party claim for an amount equal to or greater than the owner's $15,000/ $30,000/ $5,000 statutory liability, the owner's liability to the third party is discharged. (Flores v. Enterprise Rent-A-Car Co. (2010) 188 CA4th 1044) Whatever plaintiff actually recovers from the driver--whether following a settlement or judgment--must be credited against the owner's statutory "guaranty"; and the owner's statutory liability is completely discharged by a payment from the driver equaling or exceeding the permissive use liability limits. (Walker v. Balvedere (1993) 16 CA4th 1663; Lindgren v. Baker Eng. Corp. (1988) 197 CA3d 1351; Rashtain v. BRAC-BH, Inc. (1992) 9 CA4th 1847). [emphasis added] In sum, if your vehicle's liability policy meets California's minimum requirements, once your insurance carrier pays the policy limits, your responsibility is discharged.
ConclusionPurchase liability insurance if you have not already done so. Otherwise, you will be held responsible up to $15,000 per person or $30,000 per accident for any damages caused a permissive user of your vehicle.