Owner Liability for Co-Signors in Michigan

Written by Steven Matz on . Posted in .

“If I cosign on a car loan, can I be held liable if the vehicle is in an accident?”

Very likely, yes.

A lot of well-meaning people try to help out family members and friends by cosigning on car loans for them. We hear all the time from people who say “I thought I was just cosigning for the loan. My name wasn’t supposed to be ‘on’ the vehicle. Now I am being sued for an injury accident!”

The problem is that many lenders require all the parties who sign as borrowers to be listed on the title and registration. This is usually done by the dealership, so you might not realize that you are not just guaranteeing the repayment of the loan. You are also an “owner” of the vehicle if your friend or family member is driving it and is in an accident. That means you could be held responsible (even be sued) if “your” vehicle was at fault and someone else got hurt. If you didn’t get your own insurance on that vehicle, you could face financial problems too numerous to describe here if the vehicle is involved in an accident.

Remember: for purposes of this issue, an “owner” of a vehicle is defined as a person who holds legal title to a vehicle. If your name is on the title or registration of a vehicle, that definition includes you. Even if you just thought you were doing someone a favor by cosigning a loan. Even if you have never used the car yourself. Check to see if you are going to be included on the registration and title of the vehicle before you sign. Think hard about whether you want to take that risk! Ask your insurance agent about coverage before you do anything.

Source: MCL 257.37; MCL 257.401

Written By Steven Matz

Steven J. Matz is a founding shareholder of Matz Injury Law. The firm’s concentration is on personal injury litigation, with an emphasis on traumatic brain injury. Mr. Matz earned a Bachelor of Arts degree with high distinction and highest honors in 1974 from the University of Michigan and a Juris Doctor degree in 1977 from The George Washington University National Law Center. Mr. Matz lectures and publishes in a number of areas, including ethics, marketing, trial tactics, and head injury. Mr. Matz has served on the Michigan Association for Justice Executive Board and currently serves the Michigan Attorney Discipline Board as a Hearing Panel Chairman and Master. He is also a member of the State Bar Committee for Character and Fitness.
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