Understanding Car Ownership and Liability in Vermont

When you hand over your car keys in Vermont, you may also be handing over your insurance coverage. Unlike some states that prioritize the driver’s insurance, Vermont generally follows the rule that car insurance follows the vehicle, not the person. That means your auto policy is likely the first line of coverage—even if you weren’t driving.

This legal framework can surprise many vehicle owners, especially when the person borrowing the car is fully licensed and insured themselves. However, Vermont’s insurance structure aims to make sure that accident victims can access coverage from the most immediately available source: the car involved in the collision.

Primary vs. Secondary Insurance in Vermont

If a friend crashes your vehicle, your insurance is considered primary. This means:

• Your liability coverage pays first for damages caused to other people or property.
• If you have collision coverage, your policy can also cover damage to your own vehicle (subject to your deductible).
• Your premiums could increase—even if you weren’t in the car.

Your friend’s insurance, if they have it, may come into play as secondary coverage. Their policy could potentially cover costs that exceed your limits or apply if there are specific exclusions in your policy.

For example:

• If your policy has a $50,000 bodily injury limit but the injuries total $75,000, your friend’s policy might be asked to contribute the remaining $25,000.
• However, this only applies if your friend’s insurer allows for permissive use in its terms.

Permissive Use and Insurance Implications

Vermont law recognizes a concept called permissive use, which refers to situations where the owner knowingly allows someone else to drive their vehicle. If your friend had your explicit or implied permission to use the car, your insurance will be responsible for the resulting accident—even if it wasn’t their fault.

But this rule has limitations. If your friend took your car without permission, different legal and insurance consequences may apply:

• Your insurer could deny coverage altogether, especially if you report the vehicle as taken without consent.
• If the friend is caught driving unlawfully, they may be considered personally liable.
• Victims may still try to sue you, and disputes over permission can complicate the claims process.

It’s important to remember that verbal permission counts in Vermont. You don’t need a signed note to be on the hook for liability—telling someone they can borrow your car is enough.

What If the Friend Was Driving Negligently?

Negligence plays a central role in determining fault and financial responsibility in any Vermont car accident. If your friend was:

• Speeding
• Driving under the influence
• Distracted by their phone

—they may be legally and financially responsible for the damage. However, even if they are found negligent, your insurance still pays first if they had your permission to drive.

There’s a twist if they were engaged in criminal activity with your car. If someone crashes your vehicle while committing a crime (like reckless evasion or DUI), insurers often invoke exclusions that deny coverage. This scenario could force the at-fault driver to pay out-of-pocket or leave you to seek reimbursement through a civil lawsuit.

Vermont’s Financial Responsibility Minimums

Vermont law requires all registered vehicles to carry minimum insurance, which includes:

• $25,000 per person for bodily injury
• $50,000 per accident for bodily injury
• $10,000 for property damage

If your policy only meets the minimum and your friend causes extensive damage, you could be on the hook for any excess amounts. In severe cases, the accident victim could pursue a lawsuit for the balance, targeting either you or the friend depending on the facts.

To better protect yourself, consider increasing your liability limits or purchasing umbrella coverage. These added layers can help you avoid serious financial loss if your car is involved in a major accident—regardless of who’s driving.

What If the Friend Was an Excluded Driver?

If you’ve listed someone on your policy as an excluded driver—a common tactic for keeping premiums low—and they crash your car, you will not be covered. Vermont insurers treat excluded drivers as completely uninsured.

This situation could create:

• A denial of coverage by your insurer
• Legal liability for any injuries or damages caused
• Difficulty getting reinsured in the future

In short, never allow an excluded driver behind the wheel, even in an emergency.

Filing a Claim After a Friend Crashes Your Car

After an accident, follow these steps to protect your financial interests:

1. Report the incident to your insurance company immediately—even if your friend says they’ll pay for the damage themselves.
2. Document everything, including photos of the scene and your car’s condition.
3. Request a copy of the police report, which can help establish facts and clarify fault.
4. Communicate with the insurance adjuster to understand how coverage will apply.
5. Review your policy language, especially around permissive use and excluded drivers.

Preventing Future Liability

The best way to avoid a costly situation is to be careful about who you allow to drive your vehicle. Even if your friend is licensed and trustworthy, consider:

• Asking whether they have their own auto insurance.
• Setting clear boundaries about where and how far they can drive.
• Avoiding lending your car to anyone with a history of reckless driving or DUIs.

Remember, your generosity shouldn’t cost you thousands of dollars or damage your insurance record.

Conclusion

In Vermont, car insurance follows the vehicle, not the driver. That means when you let a friend borrow your car, you’re potentially accepting responsibility for their actions behind the wheel. Understanding how Vermont’s permissive use rules and insurance coverage tiers work can help you make informed decisions—and avoid unexpected financial fallout.

Need Legal Help? Brandon J. Broderick, Attorney at Law is One Phone Call Away

Navigating Vermont Car Accident Claims can be challenging. Fortunately, you don't need to do it alone. The experienced personal injury lawyers at Brandon J. Broderick, Attorney at Law, are available 24/7 to help you understand your legal options, gather necessary evidence, and build a strong case to secure the settlement you deserve.

Contact us now for a free legal review.