Who is Actually Covered on Your Insurance Policy?

You may not think twice about lending your vehicle to someone you trust. Even so, it's important to understand how doing so may affect your auto insurance rates in the future, and what happens if they are in an accident or cause damage to someone's property.

Anyone with a valid Canadian driver's license who has your permission to drive your vehicle is typically covered under your policy. So, if you are sharing your car, you are also sharing your car insurance. Guest drivers could include a friend, neighbor, or relative.

Your insurance company may have specific rules, as well. For example, if your policy covers personal use only, your insurance won't cover damages if someone borrows your car to deliver pizzas. Your insurance coverage also won't extend to guest drivers who participate in illegal activities like driving while intoxicated or racing while driving your vehicle.

Before you agree to lend your vehicle, it's smart to contact your insurance company to verify that the policy will cover occasional use by a guest driver. Your premiums could go up if there is a claim against your insurance; even if you weren't driving at the time of the accident.

When to name a guest driver on your auto insurance policy

Generally, anyone who borrows your car consistently should be added to your policy as a guest. For example, if your sister uses your vehicle every Tuesday night to drive to her dance class, it's wise to add her to your policy. However, if your neighbor uses your truck once or twice each spring to handle a few landscaping chores, it's likely that your insurance company will not require you to add them to your policy.

Drivers requiring supervision because they are learning do not need to be added to your auto insurance policy. Even if they regularly drive your car, if they only have a learner's permit they will be covered under your policy as long as they are following the rules applicable to their license level.. To be safe, talk with your insurance company about their rules regarding sharing your vehicle with someone who is practicing their driving skills.

What happens if there's an accident

Drivers found to be more than 0 percent responsible for an accident will have the incident recorded on their insurance record. If a guest driver is in an accident while operating a vehicle and the insurance is in your name, their at-fault accident goes on your insurance record.

Depending on your insurance company, your rates could go up the next time your policy renews. If you purchased “accident protection” coverage you will lose that coverage once you make a claim. If you've never been in an accident or haven't been at-fault in a collision in more than six years, your clean record may earn you a discount. It's crucial to consider the potential financial risks when agreeing to loan a vehicle.

You may be eligible for a lower rate on car insurance if you have a conviction-free and accident-free driving record. The car insurance marketplace in Canada is highly competitive, so the best way to get great rates is to use an insurance calculator and take some time to compare auto insurance companies.