What is my liability if I agreed to co-sign for car loan for a friend and the insurance is in my name and she got into an accident while drinking?

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What is my liability if I agreed to co-sign for car loan for a friend and the insurance is in my name and she got into an accident while drinking?

One night she decided to drink and drive, and according to her she was hit by a car on the freeway. Now a few months later, I’ve received a letter from my insurer stating that the other party wants a settlement which will affect my insurance premium rate. Since their demands exceed my policy limit I will have to come out of pocket. What should I do in this case?

Thank You

Asked on January 8, 2016 under Accident Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

If the insurance is in your name, you and your friend (since she was the at-fault driver) are jointly liable to the injured party for all damages, injuries, and costs resulting from her accident, which amounts exceed your policy limits. You in turn could try to sue your friend, since she was so very much at fault, to make her pay your share of any judgment or settlement--but, of course, if she would not have the money to pay that amount, it will not help you. (And if she doesn't have money to pay the injured party, the majority or even possibly entirety, of any judgment the injured party gets, or settlement you enter into, will come of your pocket, too.)


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