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Can lienholder be responsible in car accident?

I own a car and have it in my name. I am selling it to a friend with a loan with monthly payments and a contract. The friend has comprehensive and collision and state minimum liability. I am a little worried about the liability. If he is in an at-fault accident and exceeds his limit, do I the owner of the car become responsible? Can they sue me?

Jan 12, 2019 Cincinnati, OH

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Ava Lynch

Director of SEO

Credentials
  • Licensed Insurance Agent (former) — Property and Casualty

Ava joined The Zebra as a writer and licensed insurance agent in 2016. She now works as a senior analyst, providing insights and data analysis as one…

If you keep the car registered in your name, there is a possibility that you could be held liable for damages that exceed the driver's policy. It is not common, however, there is still a chance. If you do let your friend take over the payments, make sure you are listed as an additional interest on the policy. This means you have a financial stake in the vehicle. Also, check with your finance company. They may require you to be listed as a driver on the policy that covers the car. Good luck and if you have any questions, don't hesitate to ask.

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