Reduce Your Liability When You Lend You Car to Friends

One of the things that people don't realize is that when they lend their cars to friends, they are opening themselves up to liability. The liability that comes from that person getting into a car accident is difficult to limit, but there is one kind of liability that every car owner needs to be aware of. This is the liability that comes from a defect in your car causing the accident. In that case, your own friend could sue you and might even win.

Duty to Disclose

While each state has different laws regarding this matter, when you loan something out to a friend or a stranger, you do not have to make sure that it is free from defects. What you do have to do is make sure that you have disclosed any known defects that could make the item dangerous. This is generally the same standard with cars.

The problem that a lot of car owners run into is that they don't always remember all of the defects in the car. Obviously, the more obvious defects such as a flat tire are something that most people remember to warn their friends about. In fact, their friends can't even take the car if they don't take care of that defect. But what about those defects that you know about but didn't remember to mention or perhaps don't even remember? Unfortunately, in those cases, you could be liable.

Keep Stats on Your Car

Most of the time when people think about asset protection, they think about things like coins and jewelry. However, you shouldn't forget about your cars. You can use asset protection software to keep track of all the details about your car that you need to share with anyone you lend the car to.

However, to really reduce the liability, you should make sure that you regularly update the information on your car entries. This means that when you take your car in for its routine tune ups, you make note of it. When you notice that something is going wrong with the car such as with the steering or the brakes, even if it is not serious, you make note of it. With Asset Panda, you can save and print out reports on particular items. By taking this information, you can then show it to your friends before you loan the car to them. Check your state though because you may need to get your friend's signature.

This form of asset protection will help to protect you from much more serious risks such as being sued. It does not prevent it entirely, but it helps to demonstrate that you have satisfied your duty. Just be sure that you also include information on when the problems are corrected as well as when they are discovered.

Your Standard of Liability

Remember that your liability in terms of the car breaking down is generally only limited to those things that you actually know or that you should have known. While there is some variety on this through the various states, you just have to let your friends know. However, there is one exception to this. If you know that your car has a dangerous defect in it, you need to make sure that your friends know about that explicitly as well as the risks that it will cause. As a general rule though, you should not loan the car out in this condition. In the majority of all states, all car owners are considered to have an implicit duty to keep their cars in working order before letting them out onto the road.


Krista has developed a passion for operational strategy via KPI management, streamlined processes, implementation of automation systems, and scaling Asset Panda. When she isn't attempting to help take the company to new heights, she enjoys spending time with her family, gardening, playing golf, cooking, and a good glass of wine.

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