Questions of liability in auto accidents are usually easy to answer. There's usually a person who's clearly at fault, or the responsibility can be divided appropriately among the parties involved. However, there are certain accident scenarios in which figuring out who's responsible is difficult at best.

Scenario No. 1
Your friend drives your car and causes a little damage.

If you loan your car to a friend, she causes an accident, and both of you have auto insurance, your insurance is going to pay first and you'll have to pay your deductible. The reason? Your auto policy insures your vehicle plus "you, any relative, and anyone else using your car if the use is (or reasonably believed to be) with your permission."

Scenario No. 2
Your friend drives your car and causes a lot of damage.

Let's say the accident your friend causes results in serious bodily injury and property damage to another person. Liability coverage consists of two parts: bodily injury liability and physical damage liability. The driver's policy covers the driver and all passengers in the vehicle for bodily injury. The car owner's liability covers property damage caused by his or her car. Liability insurance also covers the cost of your legal fees in the event that you are sued, but if your liability limits are exceeded, the courts can attach your personal assets, such as your home, to recover damages. Liability coverage won't pay for damages beyond the limit for which you are insured.

Scenario No. 3
Your uninsured friend drives your car and causes a lot of damage.

Lending your car to an uninsured friend might be analogous to a marriage: You take the good with the bad. In this case, your uninsured friend has put you in a bad spot. If the damages your friend causes exceed your policy limits, the injured party can come after you for medical and property-damage expenses.

Scenario No. 4
Your friend drives your car without your permission and crashes it.

You're not likely to be held accountable for the damages because your friend borrowed your vehicle without your knowledge. In this case, your friend's insurance (if he or she is covered) will kick in first. If your friend isn't covered, you'll probably need to use your collision insurance to cover the damages to your vehicle, and your liability insurance would cover damage to others' property. Bear in mind that insurance companies will assume a friend has permission to use your car unless there are clear indications that you denied permission or there are extenuating circumstances, such as a drunk friend who takes your car without your knowledge.

Scenario No. 5
Your car is stolen and then crashed.

If the thief crashes into someone or something, you won't be held responsible for the damages done to other people and their property, but you probably will have to use your collision insurance to pay for the damage to your car. Don't count on the thief having auto insurance, let alone enough money to spring for repairs and medical expenses. Even if the thief has auto insurance, his company won't pay for his criminal act.

Deciphering liability across state lines
If you hold the minimum auto liability coverage's required in your state and you are involved in an accident in another state that requires higher minimum coverage's or other coverage's (such as personal injury protection), your policy will automatically increase to meet that state's minimum required coverage's.