Think before you loan your vehicles

As mission-driven organizations, churches and schools naturally want to support others. When another ministry, charity, or non-profit asks to borrow your van or bus, the inclination is to say yes. However, lending out your organizational vehicle exposes your institution to severe and complex legal and financial liabilities that far outweigh the charitable intent.

Brotherhood Mutual strongly recommends that you do not make your vehicles available to other organizations.

1. The Core Liability Problem: The “Deep Pockets” Rule

When your vehicle is involved in an accident, the legal system often follows the “Deep Pockets” principle, meaning plaintiffs will sue everyone remotely connected to the incident. Because the vehicle is owned by your church or school, your organization becomes the primary target, regardless of who was driving.

• Insurance Complications: Your commercial auto policy (which covers your van or bus) is based on the assumption that your organization’s approved drivers are using the vehicle for your organization’s mission.

  • Driver Standards: You cannot confirm if the borrowing organization’s driver meets your rigorous standards (background checks, driving record review, training).

  • “Permissive Use” Clause: While your policy might cover “permissive use,” the limits of that coverage may be insufficient for a major accident, and your premium will be directly impacted by a claim caused by an outside group.

  • Primary Liability: Your policy will likely be tapped first as the primary coverage source, leaving your organization responsible for the deductible and the resulting long-term premium increase.

2. Risk Transfer Failure: Who Pays the Deductible?

Even if the borrowing organization has its own insurance, the claim process can be complicated and costly for your institution.

• Immediate Financial Burden: If a claim is filed, your insurance carrier will likely pay the claim and bill your organization for the deductible immediately. Recovering that money from the borrowing group can be difficult, if not impossible, placing an unplanned expense on your budget.

• Reputational Strain: Having to aggressively pursue a fellow ministry or charitable partner for reimbursement creates friction and damages relationships.

3. Maintenance and Maintenance Liability

When you loan a vehicle, you lose control over essential maintenance and inspection schedules.

• Negligence Claims: If the vehicle is involved in an accident and investigators find the cause was related to deferred maintenance (e.g., worn tires, bad brakes), the borrowing organization can claim that your institution was negligent in maintaining the asset it loaned out. This is a direct liability to your church or school.

4. Safer, Responsible Alternatives

You can support a partner organization’s mission without accepting massive, uncontrolled liability. The responsible way to help is to assist them financially in acquiring safe, properly insured transportation from a third party.

• Financial Assistance for Leasing/Chartering: Instead of lending your vehicle, offer to pay for or subsidize the cost of your partner organization leasing or chartering a vehicle from a reputable commercial rental agency (e.g., Enterprise, a coach company).

  • Benefit: This transfers the liability, maintenance, and primary insurance risk entirely to the commercial agency. Your financial contribution is clean and traceable.

• Chartering a Bus: For large groups, encourage them to hire a professional charter bus company. These companies carry multi-million dollar commercial liability policies and employ trained, certified drivers.

• Donation: If the partner group needs a vehicle long-term, consider making a fully documented, legal donation of an old vehicle with the explicit understanding that they assume all future liability and maintenance.

By all means, help other organizations- but don’t forget to keep yours safe, too!

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