Expert: Bennie719 - 3/23/2008

Question
QUESTION: Can a insurance company hold the leinholder of a vehicle financially responsible for the costs to repair their  insured's vehicle after an accident where the legal registered owner,who was at fault, did not have current liability insurance? This is in California.

ANSWER: Hi Jason,
Under California Law, the lienholder is never responsible for the actions of anyone driving a car that they have financed.

I hope you find this information to be of help.
Your feedback by rating my answer will be appreciated.
Sincerely,
Bennie
San Francisco Bay Area

---------- FOLLOW-UP ----------

QUESTION: Thanks Bennie, Does this still hold true if the leinholder is the parent of the legal registered owner? The registered owner is in his early twenties so he is not a minor. It is an estranger relationship at this point.

Answer
Hi Jason,
Like you, as a parent I have had to purchase vehicles for some of my children and to prevent them from selling or trading the vehicle, named myself as the lienholder.
As long as you are simply the lienholder and not one of the registered owners, no liability exists against you.
If your son has an accident, you WILL receive a demand for payment from the adverse company demanding payment.  Just remind them that you are only the lienholder, not the registered owner and the problem will go away.  Been there.......done that.
I hope this helps to ease your mind, because I know it's a stressful situation.
Sincerely,
Bennie