Parents often purchase or lease vehicles in their own name and allow their children to be the primary drivers of these vehicles. In addition, automakers offer attractive discounts to employees, vendors, and related parties. In order to take advantage of these discounts, the automobile needs to be purchased or leased in a qualifying name. Often the qualifying person will allow relatives or others to have the regular use of these vehicles; however, there are some major disadvantages to allowing your name to be on the lease or title of a car driven regularly by another person.
Under Michigan Law, the titleholder or lessee is liable for injuries arising out of the use of an automobile. For example, a $10,000 claim arising out of another person's use of an automobile you own or lease is a claim against you.
If the driver has insurance on your auto and you are included as an additional insured and if the limit of liability under that policy is sufficient, your personal assets and driving privileges may not be touched. Unfortunately, this is unlikely to be the case. All too often, the limits purchased are low (i.e. a $100,000 bodily injury per occurrence) and the policy typically fails to adequately include the titleholder as additional insured. Furthermore, it is possible that you, the owner or lessee of the automobile, will not even know if the policy is cancelled. Your own insurance will not protect you if this automobile has not been scheduled on your policy.
Another major disadvantage involves the loss of your driving privileges, certificates of registration and license plates. Under Michigan Motor Vehicle Code, if an injured person does obtain a judgment against you, your driving privileges, certificates of registration and license plates are suspended until the judgment is satisfied pursuant to the Motor Vehicle Code provisions. Additionally, all of your personal and business assets can be seized to satisfy that judgment.
Thus, is it worth jeopardizing your personal and business assets as well as your driving privileges by putting your name on the title or lease of a vehicle which is primarily driven by another individual? From a legal perspective, vehicles should be titled or leased in the name of the individual who will be the primary driver. From an insurance perspective, you should consult with your insurance agent to determine the best way to insure against potential risk.