Those of you that provide Loaner vehicles to your customers will want to know about this. We got a call from a dealer that was named as a defendant in a lawsuit. Its customer, who had brought his vehicle in for repairs and was provided a loaner, was involved in an accident while using the vehicle. The third party driver's vehicle was damaged and is alleging personal injuries, and the loaner vehicle was totaled. The other driver has sued both the customer, as the person driving the vehicle, and the dealership, who owns the loaner vehicle. No doubt, the plaintiff's lawyer is looking for multiple insurance policies to collect on.
The dealership used a "Loaner Vehicle Agreement" that places liability on the customer for all damages that may be caused while using the vehicle, and it confirmed the customer's personal insurance was in effect. The dealership thought it was in the clear.
Not so fast. While a well written Loaner Vehicle Agreement offers the dealer some protection, a third party isn't necessarily subject to this agreement. At this early stage of the case, the plaintiff's theory appears to be that the customer/driver was negligent and caused the accident, and the dealership is also being pursued as owner of the vehicle. Its liability will be dependent on the facts of the case. For instance, what if the customer/driver states that the vehicle's brakes didn't respond, or that there was some other mechanical issue that contributed to the collision? Or what if the plaintiff investigates and finds that the vehicle had some previous underlying issue that may have contributed to the collision? The Loaner Agreement may not be of much help in those instances
Our Tip of the Week......
If you provide loaner vehicles, or even if you rent vehicles to your customers while they are waiting on their vehicle to be repaired, make sure your insurance agent is aware of your business practices and that you have an insurance policy that offers you protection in this scenario. The defense costs of a case like this can be significant, and insurance is very valuable in this situation
Whatever the Problem, Keep Calm & Call Ignite
Ignite has experience helping dealers through all sorts of issues. At the first sign of danger, give us a call, or better yet, engage us at info@ignitecp.com and let us help you guard against these risks.
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