Owner Liability in Car Accident Litigation

Sometimes the owner of a motor vehicle can be liable for injuries caused by the driver of their car, even though they are neither driving nor at the accident scene. Liability flows from the ownership of the vehicle and the grant of permission for the at-fault driver to use the car.

Vicarious Liability for Car Owners

When a car owner lets another person drive a car, the car owner as sharing liability for any accident caused by the borrower.

As the owner of a vehicle is likely to be insured, from a public policy perspective owner liability helps ensure that a person injured in a car accident will be able to recover compensation from a person who is both likely to be insured and was in a position to prevent the at-fault driver from operating the vehicle at the time of the accident. A borrower of a car is less likely to be insured.

The car owner's liability may arise from an owner liability statute, a law that defines situations in which a car owner is liable when other people use the vehicle, or on common law principles:

  • Owner Liability Statutes: States that have passed owner liability laws make car owners liable for accidents that are caused by the drivers of vehicles that they own.

  • Negligence Theories: Even in the absence of an owner liability law, or where an exception to the law applies, it may be possible to hold the vehicle's owner liable for the accident. For example:

    • Negligent Entrustment: When the car owner knows or has reason to know that the person entrusted with their car is not a safe driver, and nonetheless allows the person to operate their car, the owner may be liable for injuries caused by the driver.

    • Negligent Supervision: When the owner of a car is actively supervising the driver of the car, it may be possible to recover from that person under a theory of negligent supervision of the driver. For example, in the context of driver training, or when the car owner is acting in a supervisory capacity to the driver but fails to properly exercise that supervision when doing so would likely have prevented an accident, the owner may be liable.

  • Vicarious Liability: In employment situations, an employer is normally held liable along with an employee for injuries resulting from the negligence of the employee, such as causing an accident while driving a company vehicle.

Owner liability principles do not extend to companies that lease vehicles to drivers, or to rental car companies for accidents caused by a driver who has rented a vehicle.

Owner liability normally follows from the permissive use of a vehicle by the at-fault driver. That is, the owner gives the borrower permission to use the car, or knowingly acquiesces in their use of the vehicle. Depending upon state law, in the event of an accident a member of the owner's household may be presumed to be driving with the owner's permission.

Stolen Vehicles

Owner liability does not ordinarily extend to non-permissive uses of a car, such as where a vehicle is stolen or taken without permission. However, at times an owner may be found liable under theories of negligence even when their car is stolen or used without permission.

For example, some jurisdictions will hold an owner liable if they leave the keys in the ignition of the car, and their car is stolen and subsequently involved in an accident, on the basis that it is negligent to make it that easy to steal a vehicle and that it is foreseeable that a car thief might drive dangerously particularly if the police attempt to stop the car after receiving a report of its theft.

Government Vehicles

Where the owner of a vehicle is a government agency, sovereign immunity may apply, potentially limiting or preventing a claim from being successfully made against the government agency that owns the vehicle.

Risks Following the Sale of a Used Car

Car owners who sell their cars sometimes make serious errors in judgment when selling their vehicles, that can give rise to subsequent claims against them.

"Lending" License Plates

In most states, the seller of a vehicle is required to remove the license plates upon sale of a vehicle. Sometimes the car owner will let the buyer use the plates that are on the car. In those states, the only reasons for a buyer to want to keep the old plates are to avoid registering the car, or to avoid buying insurance for the car.

Car buyers are generally permitted to drive a newly purchased use car from the point of sale to their home or to a location where they can register the vehicle, even without having plates on the car, so there is no reason why a car seller should permit a buyer to keep the license plates.

For states in which the license plates stay with the vehicle, it is important that the owner immediately file a notice of the sale with their state's department of motor vehicles, documenting that the sale occurred. Sellers should get the form in advance of the sale, so that they can be certain that they have all of the information necessary to complete the form following the sale.

Failing To Complete Title Work

Following the successful sale of a vehicle, the seller should fill in the necessary information on the title to transfer ownership. Ideally this will be done at a DMV office, such that the buyer can immediately transfer the title.

If that is not possible or is determined to be inconvenient, the seller should keep a copy of the completed, dated transfer of title.

Some states require sellers to file a document within a specific number of days of a car sale to avoid liability, including traffic and parking fines. If you live in such a state, be sure to file the appropriate documentation with your state's DMV.

Failing To Submit Documentation of the Sale

In the small number of states in which the license plate is transferred to the buyer of a used car, rather than being retained by the seller, a car seller is required complete and file a document that records the sale of the vehicle with the state. If a car seller fails to file the document in a timely manner, that failure may call into question whether the vehicle was in fact sold prior to the accident, and may subject the seller not only to accident claims, but to having to pay fines from toll road violations, parking tickets, camera tickets, and vehicle impound that accrue prior to the date the document is filed with the state

When you sell a used car, make sure that you fully comply with your state's requirements to transfer title.

  • If your state requires you to file documentation of the sale, make sure you complete and file the documentation in a timely manner.
  • If your state does not have such a requirement, make sure that you retain the vehicle's license plate and keep for your records a copy of the vehicle title after you fill in all information relating to the transfer, including the name and address of the buyer.
Copyright © 2006 Aaron Larson, All rights reserved. No portion of this article may be reproduced without the express written permission of the copyright holder. If you use a quotation, excerpt or paraphrase of this article, except as otherwise authorized in writing by the author of the article you must cite this article as a source for your work and include a link back to the original article from any online materials that incorporate or are derived from the content of this article.

This article was last reviewed or amended on Apr 10, 2018.