Will we be held responsible as a co-owner for an unsured motorist’s car accident?

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Will we be held responsible as a co-owner for an unsured motorist’s car accident?

Heres the scenario. Husband co-signed on adult sons car loan. Car loan was paid off a year ago. Son receives all paperwork pertaining to car. Adult son had all bills on auto-deduct. Bank card was damaged and replaced so he set up new auto-deduct for bills but car insurance did not go through. Son did not change his address when he moved so did not receive insurance cancellation notice. Son rear-ended two other cars totaling his car. No injuries that we know of. Son calls his insurance to report accident and is told he is no longer insured.

Recently found out that when car loan paperwork was drawn up, husband was listed as co-owner not co-signer as we thought. Our own insurance company which includes auto and an umbrella policy say accident is not covered under them.

So we are under the impression that our son will be considered a uninsured motorist. He could lose his license for a year which he relies on as a merchandiser. Accident did not happen during work day. And, that we will probably be sued by the insurance companies. Do we have any recourse any leeway with umbrella policies in cases such as this? Or, will we be taking money out of our 401ks? Any advice is appreciated. Oh, we are in California. Thank you

Asked on May 10, 2018 under Accident Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

Whether your umbrella policies will help you depends on the exact terms of those policies--i.e. what they say they cover. Insurance policies are contracts and are enforced in accordance with their plain terms--you have whatever coverage the policy gives you under its plain language.
If your husband is a co-owner of the car, then yes: he may be liable here (and so you may have to pay for any damge or injuries out of pocket, if you don't have coverage). An owner of of a vehicle is responsible when a permitted driver (i.e. not a a thief) or co-owner is at fault in an accident, and the law presumes that your son is at fault (it presumes fault on the part of the driver who rear ends another, since the rear-ending driver should have maintained such safe following distance and speed as to be able to avoid the accident). If your husband was listed as co-owner, not just guarantor or co-signer of the loan/financing, you may well be liable.


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