Car accidents can be complicated, especially when the driver responsible for the crash doesn’t even own the vehicle they were driving. In California, liability for damages and injuries in such cases depends on whether the driver had permission to use the car, the owner’s negligence in allowing them to drive, and applicable insurance policies.

Understanding California’s permissive use laws, negligent entrustment doctrine, and key legal cases can help determine who is financially responsible for the accident. This article will break down when the vehicle’s owner is liable, when the driver is personally responsible, and how negligent entrustment can result in greater financial exposure for the owner.

Who Is Responsible for an Accident When the Driver Doesn’t Own the Car?

In California, liability generally falls on the vehicle owner if they permit someone else to drive their car. However, the driver, the owner’s insurance, or even an employer may be liable depending on the circumstances.

The key scenarios we will discuss are as follows: 

1. Permissive Use – When the Owner’s Insurance Pays
2. Non-Permissive Use – When the Driver is Solely Responsible
3. Negligent Entrustment – When the Owner is Fully Liable for Bad Decisions
4. Employer-Owned Vehicles – When the Company is Responsible

Let’s go over each scenario in detail to see how responsibility and liability is allocated in these types of situations in California. 

1. Permissive Use: When the Owner’s Insurance Covers the Accident

Under California Vehicle Code § 17150, vehicle owners are liable for accidents caused by drivers who had their permission—either express or implied—to use the car:

“Every owner of a motor vehicle is liable and responsible for death or injury to person or property resulting from a negligent or wrongful act or omission in the operation of the motor vehicle by any person using or operating the same with the permission, express or implied, of the owner.”

Insurance Coverage for Permissive Drivers

In California Vehicle Code § 17151, liability for car owners under permissive use is limited to:

• $15,000 for injury or death to one person.
• $30,000 for injury or death to multiple people.
• $5,000 for property damage.

This means that if a permissive driver causes an accident, the owner’s insurance will cover damages up to these limits. If the damages exceed these amounts, the driver’s own insurance policy may cover the rest – assuming the driver has their own car insurance. 

Case Example: Milgate v. Wraith (1996) Supreme Court of California

In this case, a car owner allowed a friend to drive their vehicle, and that friend caused an accident. The court held that the owner’s insurance was responsible for covering damages under permissive use laws.

But the liability for the car owner will be capped to $15,000 under California’s Permissive Use statue – unless the owner knew that the driver had a history of negligent driving (see below under Negligent Entrustment). 

✅ Key Takeaway: If the driver had permission, the owner’s insurance is the primary source of coverage, but liability is capped.

2. Non-Permissive Use: When the Driver is Solely Responsible

If the driver did not have permission to use the vehicle, liability shifts to the driver instead of the owner.

California Law on Unauthorized Use

In California, a vehicle owner is not responsible for damages or injuries caused by a driver who takes a car without permission. 

California law clearly defines what constitutes unauthorized use of a vehicle. Two key statutes apply in these situations:

• California Vehicle Code Section 10851(a) – Unauthorized Taking of a Vehicle: According to California Vehicle Code § 10851(a), it is illegal for anyone to take or drive a vehicle without the owner’s permission, with the intent to deprive the owner of possession. This means that if someone takes a car without consent, the vehicle owner is not responsible for any actions committed by that unauthorized driver.

• Additionally, California Vehicle Code § 10854, also known as joyriding law, addresses cases where someone who was given access to a vehicle uses it without the owner’s consent. Under this law, anyone entrusted with a vehicle who then misuses it is guilty of a misdemeanor. Again, this reinforces that vehicle owners are not held liable for unauthorized use by another person.
• California Insurance Code § 11580.1(b)(4) clearly states that insurance companies are not obligated to provide coverage when a vehicle is used without the owner’s consent. This means that if an unauthorized person takes your car and gets into an accident, your insurance provider may deny coverage for damages or injuries caused by that driver.

If your car is stolen or taken without permission, you generally won’t be held liable for any accidents or damages caused by the unauthorized driver. However, it’s crucial to report the unauthorized use to law enforcement and your insurance company as soon as possible.

Here’s what you should do if someone takes your car without permission:

1. Report the unauthorized use to the police – This creates a record of the incident, which may be necessary for an insurance claim.
2. Notify your insurance provider – Let your insurer know that the vehicle was used without consent so they can update their records.
3. Document any damages or incidents – If the unauthorized driver causes an accident, having detailed records will help in case of legal or insurance disputes.
4. Review your insurance policy – Some policies offer optional coverage for theft or unauthorized use, so it’s worth checking your policy for details.

Farmers Insurance Exchange v. Zerin, 53 Cal.App.4th 445 (1997), addresses the issue of whether an insurance company can recover payments made to an insured when a third party is responsible for the loss. In this case, Farmers Insurance Exchange (Farmers) compensated its insured for damages resulting from a car accident. Farmers then sought reimbursement from the third party, Zerin, who was allegedly responsible for the accident. The court examined the principles of subrogation, which allow an insurer to “step into the shoes” of the insured to recover costs from the party at fault. The California Court of Appeal held that Farmers had the right to pursue reimbursement from Zerin, emphasizing that subrogation serves to prevent unjust enrichment and ensures that the responsible party bears the loss.

✅ Key Takeaway: If the driver did not have permission, the driver’s insurance (if any) is responsible. If they are uninsured, you may need to file an uninsured motorist claim.

3. Negligent Entrustment: When the Owner is Fully Liable

In some cases, the vehicle owner can be held fully liable for damages—even beyond normal insurance limits—under the negligent entrustment doctrine.

What is Negligent Entrustment?

Negligent entrustment occurs when a car owner allows an unfit, incompetent, or reckless driver to use their vehicle, knowing (or having reason to know) that the driver poses a danger to others.

Under California Civil Jury Instructions (CACI) No. 724, an injured party must prove:

1. The driver was negligent in operating the vehicle.
2. The owner had possession of the vehicle and granted permission.
3. The owner knew or should have known that the driver was incompetent or reckless.
4. The driver’s incompetence caused the accident.

Unlike standard permissive use laws, which have liability caps, negligent entrustment can hold the owner fully liable with no limits on financial responsibility.

Examples of Negligent Entrustment

A vehicle owner may be liable for negligent entrustment if they allow someone to drive who:

• Has a suspended or revoked license.
• Has a history of reckless or DUI-related driving.
• Was intoxicated at the time they borrowed the car.
• Suffers from medical conditions that impair driving ability.

California Vehicle Code § 14604 requires a vehicle owner to make a reasonable effort to find out if the person they are giving their vehicle to have a driver license. Specifically, the code states:

No owner of a motor vehicle may knowingly allow another person to drive the vehicle upon a highway unless the owner determines that the person possesses a valid driver’s license that authorizes the person to operate the vehicle. For the purposes of this section, an owner is required only to make a reasonable effort or inquiry to determine whether the prospective driver possesses a valid driver’s license before allowing him or her to operate the owner’s vehicle. An owner is not required to inquire of the department whether the prospective driver possesses a valid driver’s license.

Case Example: Allen v. Toledo, 109 Cal. App. 3d 416 (1980): The California Court of Appeal addressed the doctrine of negligent entrustment. A car owner allowed their friend to drive, knowing that the friend had a history of reckless driving. The friend caused an accident, and the court ruled that the owner was liable for negligent entrustment. Specifically, a vehicle owner can be held liable if they knowingly allow an incompetent or unfit driver to operate their vehicle, and that driver’s incompetence leads to injury or damage. This decision underscores the responsibility of vehicle owners to ensure that individuals to whom they entrust their vehicles are competent and fit to drive. 

✅ Key Takeaway: If negligent entrustment is proven, the vehicle owner is directly responsible for all damages—without insurance limits.

4. Employer-Owned Cars: When the Company is Responsible

If the at-fault driver was driving a company vehicle or operating a vehicle as part of their job, their employer could be liable under California’s vicarious liability laws.

Employer Liability Under California Law

Under California Civil Code § 2338, an employer is responsible for the negligent actions of an employee while they are performing work-related duties. This is known as vicarious liability: An employer is typically held liable for the negligent acts of an employee if those acts occur within the scope of their employment. For example, if a delivery driver causes a car accident while on their delivery route, the employer could be vicariously liable for the resulting damages. This law is generally used in cases where drivers for companies like UPS, FedEx, or Amazon get into an accident with another driver. 

Case Example: Armenta v. Churchill , 42 Cal.2d 448 (1954): A delivery driver caused an accident while making a delivery. The court ruled that the employer was responsible, since the driver was acting within the scope of their job.

✅ Key Takeaway: If the driver was working at the time of the accident, their employer’s insurance is responsible for damages.

What If the Driver Was Uninsured?

If the at-fault driver doesn’t have insurance and the vehicle owner’s policy won’t cover the accident, you may need to file a claim through your uninsured motorist (UM) coverage.

Under California Insurance Code § 11580.2, UM coverage can help pay for medical bills, lost wages, and other damages if the at-fault driver is uninsured.

✅ Tip: Always carry uninsured/underinsured motorist coverage to protect yourself in these situations.

Key Takeaways: Who Pays for the Accident?

What to Do If You’re in an Accident With a Non-Owner Driver

1. Call 911 & Report the Accident.
2. Exchange Information with both the driver and vehicle owner.
3. Document the Scene with photos and witness statements.
4. Check Insurance Coverage for both the driver and owner.
5. Contact a Car Accident Lawyer to assess liability and maximize compensation.