We probably all remember our parents allowing us to drive one of their vehicles while we were in high school. If your parents were like my parents, they of course told you to be careful. They may have even told you not to loan your car to anyone else because if you did, you would not be "covered." What your Dad meant by that was that if you gave your car to someone else your auto insurance would not cover any injuries that your friend caused to someone else because your friend did not have permission to drive the vehicle. Well, this is one of the few times that your Dad was actually wrong.
In general, Colorado Courts want there to be insurance coverage so that car accident victims get adequate compensation. This is the backdrop to Colorado law in this particular area. The leading Colorado case on what it means to be a "permissive user" for the purposes of auto insurance policies is Wiglesworth v. Farmers Insurance Exchange. This was a 1996 Colorado Supreme Court case. In Wiglesworth, the Plaintiff was living with a family. The family had given Wiglesworth permission to use the family's truck for the sole purpose only of driving to and from work. I bet you can guess what happened next. Wiglesworth took the family's truck under the guise of going to work, but instead, he used the truck to participate in a drag race, causing an accident. The Colorado Supreme Court held that Wiglesworth was a "permissive user" of the family's truck and that there would be insurance coverage to compensate the injured parties regardless of the fact that the family had only given him permission to drive to and from work.
The Court held that there will be insurance coverage unless the deviation from the permitted use rises to the level of theft or conversion. The Court also held that all that was necessary to have insurance coverage was that Mr. Wiglesworth had been given permission to use the vehicle for transportation to and from work. Over the years since the Wiglesworth case was announced, this general rule has been called the "Initial Permission Rule."
The Colorado Supreme Court did not care what Mr. Wiglesworth's intent was. The Court held that it is enough if the owner of the vehicle has knowledge that the car will be driven on public highways and gives permission for that purpose. The Court also stated that once the owner of a vehicle expressly or implicitly gives a driver permission to operate the vehicle, if the driver changes the "character or scope" of the use of the vehicle, this does not matter for the purposes of insurance coverage. The Court reasoned that it wanted to avoid inadequate compensation to accident victims. The Court also noted that this type of a rule provides for ease and clarity of administration of the rule. The Colorado Supreme Court wanted to avoid the courts having to make determinations as to subjective intent a driver had when using a particular vehicle.
The moral of the story is that you should be careful to whom you loan your vehicle. Barring unusual circumstances, if the driver to whom you have given your vehicle decides to let someone else drive the vehicle, even if you are unaware of the exact circumstances, you (or your insurance carrier) will be responsible for any harms and losses caused by the use of your vehicle. Based on the state of the law at this time, it appears that the only way you or your insurance company will not be responsible for an injured person's losses is if your car is truly stolen from the person to whom you loaned your vehicle.
At Anderson Hemmat, we know that insurance companies may try to deny coverage and they may not be familiar with Colorado's "Initial Permission Rule." If an insurance company is denying you fair compensation for your harms and losses, please call 303-782-9999 to speak with one of our attorneys today.