In Florida, the owner of a vehicle can be held liable for a car accident caused by someone else driving their car. However, the liability is limited to $100,000 per person for bodily injury, but up to $600,000 if the driver is insured for less than $500,000.
The legal basis behind extending liability to the owner of the car is called the Dangerous Instrumentality Doctrine. Under the doctrine, if a vehicle owner allows someone else to drive the vehicle, then the vehicle owner is vicariously liable for damages caused by the negligence of that other person when driving the vehicle.
Dangerous Instrumentality Doctrine
The dangerous instrumentality doctrine is a legal concept that states that the owner of something that is inherently dangerous can be held liable for injuries resulting from its use, even when not used by the owner themselves. The Florida Supreme Court has held that vehicles are inherently dangerous and are therefore subject to the doctrine.
Anyone listed on the vehicle title in Florida can be held liable for an auto accident caused by someone driving the vehicle. For example, suppose a parent owns a car and their child drives the car and causes an accident. The parent can be held liable for injuries resulting from the accident.
Still, there are some exceptions to when the dangerous instrumentality doctrine applies to vehicles. The most common exception concerns rental cars. Under federal law, when a person rents a vehicle and causes an accident, the rental car company cannot be held liable even though the rental company is on the title of the car.
Another common exception concerns stolen vehicles. For the dangerous instrumentality doctrine to apply in Florida, the vehicle owner must have given permission to the driver to use the car.
The use of the dangerous instrumentality doctrine in the context of motor vehicle accidents has been somewhat codified under section 324.021 of Florida law.
Many married couples own all of their personal property jointly, including their vehicles. Unfortunately, one of the most common situations in which a vehicle owner becomes liable for the driver’s negligence is where a married couple owns a car jointly. If either spouse causes a car accident while driving the car, both spouses can be held liable for any personal injury.
The likelihood of joint liability from a car accident makes ineffective one of the most useful tools of asset protection planning: tenancy by entireties ownership. In Florida, two spouses can own real or personal property together as tenants by entireties, which fully exempts the asset from creditors of one spouse alone. But tenancy by the entireties does not provide any protection from joint liability.
For this reason, from an asset protection point of view, married couples should almost never own a car jointly.
In most cases, automobile insurance policies will cover liability that stems from ownership of the vehicle when a permitted driver has caused an accident. In fact, the insurance company will typically require the vehicle owner to list all drivers living in the household onto the policy.
Most car accident cases settle within insurance policy limits. However, when the amount of personal injury damage is significantly higher than the policy limit and when the liable parties (including the vehicle owner) have significant assets exposed to collection, the injured party may seek to recover a money judgment for amounts beyond the policy limit.
After filing a claim with your insurance company, the injured party’s attorney will often request that any person potentially liable fill out a financial affidavit. The purpose of the financial affidavit is for the personal injury attorney to see whether it may be worth filing a lawsuit against the liable party or if it instead makes more sense to settle within the insurance policy limits.
Protecting Assets After a Car Accident
If a Florida resident is facing potential liability due to another person driving the resident’s vehicle and causing an accident, there are almost always still legal options to protect the resident’s assets.
However, any transfers or conversion into exempt assets made by the vehicle owner after the accident has occurred may one day be deemed a fraudulent conveyance by a court. While there is no penalty or criminal liability associated with a fraudulent conveyance, the protection sought by the transfer may be ineffective. Proper asset protection after an accident has occurred takes advantage of Florida exemptions while minimizing the risk of fraudulent conveyance liability.
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About the Author
Gideon Alper specializes in asset protection planning for individuals and their families.
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