Can I be sued as a co-signor on a car lease in the event of a car accident?
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UPDATED: Jul 31, 2017
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Co-signing is dangerous and puts you at risk. There is no distinction between owning and leasing; you can be sued for accidents involving the leased car, as long as the driver of the car was: a) permitted to drive (didn’t steal it, etc.), and b) was at fault. If someone is seriously injured or killed in the car crash, you could be sued for a very great deal of money.
The term “co-signing” should just go away—no one should use it. That’s because “co-signing” sounds like it is different somehow from “signing” the lease…but it’s not. When you co-sign a lease, you are simply signing it: you are another signatory to the lease, which makes you another lessee (person leasing the car; the person or business leasing it to you is the “lessor”). There is no legal distinction between “signing” a lease and “co-signing” it.*
The person who leases a vehicle—all people who lease a vehicle—is/are responsible for what other people who are allowed to drive the car do with it. That means that if another permitted or authorized driver is at fault in causing a car accident (i.e., he or she was driving negligently, unreasonably or carelessly), any and all lessees can be liable for the accident, even if they personally never use the car. It is the fact of being on the lease, not whether or not someone actually ever drives the car, that determines liability.
Who is an authorized driver? Other lessees, for a start. Anyone whom any of the lessees allows to drive the car. So, for example, the friends or significant others of the other lessees. Anyone whom someone a lessee allowed to drive in turn allows to drive the car. For example, if you co-sign for your son, and he lets his girlfriend drive, and she lets her younger sister or brother drive, you could be liable for what that younger sibling does. The only people whose driving you would not be liable for would be car thieves. And you can’t just casually claim someone took your car without permission: you’d have to actually file a police report for car theft against the person(s).
As a co-signor, you are potentially liable for all accidents other than those involving car thieves. The good news is, the driver has to be liable for you to be liable. If the driver was driving carefully and someone else who was driving negligently hit them, for example, you would not be liable. Co-signing therefore does not make you automatically liable for car accidents, but does greatly expand the possibility of being liable for the actions of another person—including someone (like the other lessee, or the people whom they let drive) who you have no control over.
In addition, it’s worth remembering that by co-signing, you would also be liable on the lease. If the other lessee(s) do not pay, the lessor can sue you for the money, even you never actually used the car. Co-signing exposes you to a great deal more potential liability. Avoid co-signing when you can. Even if you help someone out with a down payment or with monthly payments, avoid putting your name on the lease if there is any way to do so, to avoid incurring more potential liability.
* Not to get too far afield, but there is a difference between signing or co-signing on the one hand and “guarantying” a debt on the other. When you “guaranty” a debt or obligation, you are committing to make sure the debt is paid, but do not become a lessee. In this case, you would be responsible only to make sure that the amount due on the lease is paid. However, this is not the case when you simply co-sign the lease; when you do that, you are, as stated, simply another person signing the lease.