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Loaning Out Your Car – When Is A Vehicle’s Owner Liable For Damages?

Posted on: September 3, 2014

Most car accident personal injury lawsuits involve at least two parties: the plaintiff, the injured party who brings the lawsuit, and the defendant, the party allegedly responsible for the plaintiff’s injuries. In some situations, the car driven by the defendant at the time of the accident belongs to a third party. In those cases, the plaintiff may have a claim against that party as well. The third party vehicle owner could be the defendant’s:

  • Parent;
  • Sibling;
  • Employer
  • Co-worker; or
  • Friend.

If you loan your car to another person, you should know when you may be liable for damages caused by another driver. This is separate from insurance covering another person who drives your car. Two theories for owner liability are those of negligent entrustment and a principal-agent relationship.

Negligent Entrustment Law in Maryland

A negligent entrustment case against the third party may exists where the vehicle’s owner is negligent in entrusting the property to someone else. “Entrustment” can include lending or renting the vehicle.

While there is no clear definition of negligent entrustment, courts in Maryland will look to whether a reasonable owner should have known the borrower was likely to use the vehicle in a way that could cause harm to others. A few examples include lending or renting a car to:

  • An underage driver, including your child;
  • Someone under the influence of alcohol or drugs;
  • An elderly person who with a revoked driver’s license; or
  • A person with a history of car accidents or reckless driving.

Agency Law in Maryland

A principal-agent relationship is created when one party, the agent, acts at the direction and under the control of another party, the principal. In some situations, the principal is liable for the agent’s negligent acts.

Unlike negligent entrustment, in which the third-party owner’s negligent derived from loaning or renting out the vehicle, a principal-agent relationship may create third-party liability for the owner even if the owner was not negligent.

In Maryland, there is an evidentiary presumption that a car’s driver is an agent of the vehicle’s owner, and the vehicle’s owner is therefore liable for the driver’s negligence. Williams v. Wheeler, 249 A.2d 104 (Md. 1969). The owner can rebut this presumption by introducing contrary evidence, such as the vehicle’s owner relinquishing control to the driver when the owner falls asleep.

Justin Katz is a personal injury lawyer who represents injury victims in Maryland, Virginia and Washington DC
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