Sure, You Can Borrow My Car...But Are You Insured?
Picture this scenario: your friend asks if they can borrow your car to drive up the road to get some food.
But what if your friend were to get into an accident on the way? Do you know if your auto insurance will cover an accident? What if your friend doesn't have insurance?
Chances are you wouldn't think through all of these various scenarios before handing over the keys to your car, but it could matter if an accident happened and you had to file a claim. So, the next time you lend your car make sure you know the answers to these following questions:
Does auto insurance follow the car or the driver?
It is a common misconception that insurance follows the driver, when in fact insurance covers the car. So if you do lend your vehicle, that person is covered under your insurance policy—not theirs. Conversely, if you were to drive their car, you would be covered under their insurance.
Does the guest driver have to meet any requirements?
To meet the coverage requirements, your guest driver will need to have a valid Canadian driver's licence. The guest driver also must have your expressed permission to drive the vehicle, whether through a written or verbal agreement. The driver must not also be committing a criminal offence while driving or engaging in a prohibited activity such as drag racing. Be sure that a guest driver has access to your proof of insurance in case they are in an accident.
Will my insurance go up if a guest driver is in an accident?
If the driver of your vehicle is in an at-fault accident, don't be surprised to see your rates go up. Although you weren't behind the wheel, your decision to lend your car to a driver makes you a higher risk in the eyes of your insurance company and therefore subject to a greater insurance premium.
What if the person driving my car doesn't have insurance?
If the person driving your car has an at-fault accident, your insurance covers the vehicle whether they have their own auto insurance or not. Legally they are allowed to drive the car without having their own insurance policy, but where things can get a bit complicated is if they are in a very serious accident and the damages exceed your coverage limits. If the driver has liability coverage then their insurance could pay secondary to your policy. If they don't have insurance, any damages you owe over your coverage limit would end up being your responsibility.
How often can I lend my car to the same person?
If you are lending your car to your friend on a daily or even weekly basis, you would be advised to add them to your insurance policy. If they were to get in an accident and it is established that they frequently drive your car, your insurance may have basis not to honour your claim. Insurance companies may vary on how often a driver needs to borrow your car before you need to add them to your policy, so if in doubt it is best to ask.
With the answer to these questions in mind, you can better decide whether to agree to lend your car to another driver or not. Remember that the person driving is covered by your insurance, and if they are in an accident it could potentially affect your future rates. Only lend your car to someone you trust.