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Insurance typically follows the car and not the driver, which means other licensed drivers can use your car. However, and I'm aware this is policy dependent, insurers generally do not allow for repeated use of a car by other drivers, especially if they live in the same household without being added to the policy.

However, imagine a scenario where one is the title holder and allows someone else that has been added to the policy to use a car. However, the person added to the policy lives with someone else and repeatedly allows that person to use the car against your wishes, which means the insurance company could potentially deny coverage.

Can you be held liable if the person (roommate) not on the policy gets in an accident even if the person that is on the policy didn't honor your request (you are the title holder)? In such a situation, should one retake possession of the car in order to avoid liability issues?

  • Be very clear about what country you are asking about - car insurance doesn't work the same around the world (in the UK, a car is insured based on the driver, and in general does not cover random third persons wanting to drive that car, but may cover the insured driver wanting to drive other vehicles on a liability only basis). – user4210 Dec 26 '18 at 4:46
  • Thank you. I edited the question to include Michigan. – user27343 Dec 26 '18 at 5:00
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First of all I am goingn to assume a US-basis, becauae the question seems to describe a US-based understanding. If this nis not a US jurisdiction, then this may not apply, or not fully.

Secondly, there will be some variation by state within the US, but most US states have rather similar laws on this topic.

Thirdly, as the question notes, the details of the policy will matter, and they are not included in the question.

All of that said, it depends what you mean by "Can you be held liable". Unless you know that the person driving your car without your permission is a generally unsafe driver, such that it would be negligent to allow that person to drive at all, the owner of the car would not normally be liable for damage to other parties by a person driving the owner's car, particularly one who does so without permission. If the driver is in fact unsafe, and the owner knows that the unsafe person is in fact using the owner's car with some frequency, then it might be negligent not to take reasonable steps to stop this.

However, if the unauthorized driver is in fact driving the car with some frequency and the owner knows this and does not take steps to stop it, nor to inform the insurance company, then the company might decline coverage if this person was involved in an accident, leaving the owner with uninsured damage to his/her property. The driver would legally be liable, but if uninsured, might not be able to pay damages. This coulkd leave the owner in a significant financial hole.

Then owner might want to instruct the invited driver not to allow the roommate to drive the car, unless the roommate is prepared to pay the added premium to cover the roommate as a named driver.

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Car liability insurance has two purposes: To make sure that the victim of an accident gets paid their damages (which may be more than the guilty person can pay), and to protect the liable person from having to pay or from bankruptcy.

The insurance will pay damages no matter who is driving (including a car thief, for example). They will try to recover their cost from the driver if the driver was not legally allowed to drive the car, for example because they were not given permission by someone who was legally allowed to give permission.

So I may allow friend A to drive my car, I may allow friend B to drive my car, but friend A cannot allow friend B to drive the car. So the insurance will very likely try to recover their cost from B if you didn't give them permission.

And remember that liability insurance is usually "third party liability" insurance and won't cover damage to your car.

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