That's the question you need to ask yourself the next time a friend asks to borrow your car.

While you can allow any driver with a current, valid driver's licence to borrow your car, it is your auto insurance policy that will provide coverage should there be an accident. Even if the person has a car insurance policy of their own, if they are driving your car, you are responsible; if they are in an at-fault accident, the accident will go under your insurance history and your insurance rates will likely go up.

In effect, when you lend your car, you lend your insurance.

Leaning towards lending?

According to the Insurance Bureau of Canada, the person you are lending your car to will be covered under your policy if:

  • You have given permission to the person borrowing your vehicle.

  • The person borrowing your vehicle is a licensed driver who is legally allowed to drive in the province.

  • The person borrowing your vehicle does not use your car regularly. If, as part of a regular routine they use your car he or she must be named as an occasional driver under your insurance policy.
  • What makes a person an occasional driver?

    Any licensed driver who is a member of your household or who regularly uses your car should be listed on your car insurance policy as a driver.

    Read: I don't ever intend to allow a certain person to drive my car but I've been told that they must be listed on my insurance policy. Why?

In the event of an accident...

If the person you lent your vehicle to:

  • Is involved in an at-fault accident, the claim goes through your policy and your rates may be affected.

  • While uncommon, it is possible at a later date (usually when the borrower is renewing or initiating a new policy) to "transfer" the accident claim so it is rated on their policy and not yours. It is best to talk to your insurance broker or agent in this situation as it requires a fair bit of communication, and agreement, between the two insurers.

  • Is in an accident where they are entirely not at fault your premiums typically will not be affected.

In general, at-fault accidents are seen as rating factors in determining your auto insurance premium, particularly in the absence of accident forgiveness.

In the event of a ticket...

Generally, if someone gets a ticket while using your car:

  • The ticket is the driver's problem, not yours.
Of course, there are exceptions so choose your would-be borrowers carefully. Consider that in Ontario if someone is caught speeding 50 km/h over the posted, not only can the police issue a ticket, but they can also impound the car being driven; a situation like this suddenly makes the problem your problem as well.

Driving while impaired

What happens if the person who borrows your car gets into an accident while under the influence of alcohol? The accident is rated on your policy and will affect your rating. A DWI situation limits the coverage just as if YOU were drunk while driving, therefore, as the owner of the vehicle, there would be no collision or comprehensive coverage, and your accident benefits and liability could be severely limited, if available at all.

There's more to lending your car than handing over the keys

Next time someone asks to borrow your car, remember: when you lend your car, you lend your insurance. So before you let anyone else behind the wheel, make sure you know they are legally entitled and allowed to be driving it.

No matter how responsible your friends may be, accidents happen, and it's best you know now what you could be in for if they're in an accident.

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* Kanetix® is an online insurance and mortgage shopping service and, more specifically is not an insurance company or brokerage. This response is believed to be accurate at the time of publication, but keep in mind that each person's situation is unique so may not apply in your particular situation. In addition, this information is subject to change and Kanetix is not responsible for any damages caused as a result of the information included in this response. As such, always check with an insurance provider, or the proper authority, for terms and conditions that may apply to you specifically as the information may vary depending on your insurer, geographic location, and particular individual circumstances.

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