Over the weekend I got talking with a friend over beers, and somehow we got onto the topic of lending your car to a family member, friends or significant other. We both mutually agreed that we’d never lend our cars to anyone for two reasons – We don’t trust anyone driving our cars, and we both drive BMW’s, and surely don’t want to run the risk of someone else burning rubber or any other damage.
After I got home, the discussion we had made me think from an insurance perspective, and I wondered what would happen if I ever lent my car to someone else, and who’s insurance would cover the driver?
While I can lend the car to someone else with a valid driver’s license, it is my 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 my car, I’m essentially responsible; if they are in an at-fault accident, the accident will go under my insurance history and likely my insurance premium will likely go up. Essentially when you lend your car, you’re also lending your insurance.
Here’s a few things that could happen if you ever decide to lend your car.
When You Lend Your Car
If you choose to lend the car to anyone else, whether your significant other, family member or friend, it is your responsibility that you ensure the following:
- The person borrowing your vehicle must be a licensed driver who is legally allowed to drive.
- You have given permission to the person borrowing your vehicle.
- The person borrowing your vehicle does not use your car regularly.
If The Borrower Gets Into An Accident
If the person you lent your vehicle to gets into an at-fault accident, the claim will go through your policy. Depending on the severity of the accident, your insurance rate may be affected.
The opposite side of an at-fault accident is an accident where the driver is not deemed at fault. If the borrower gets into an accident and they’re not deemed at fault in the accident, generally the insurance premium will remain unchanged.
In general, at-fault accidents are seen as rating factors in determining your auto insurance premium, particularly in the absence of accident forgiveness.
If The Borrower Gets A Ticket
If you lend your car, and the borrower gets nabbed for driving 50 km/h over the posted limit, the ticket is the driver’s problem. Your insurance rate would not be affected. Much like with a lot of things in life, there are exceptions, and exceptions to exceptions. Therefore you should choose your borrower carefully. For example, in the province of Ontario they introduced the Dangerous Driving act, where if someone is caught speeding over 50 km/h over the posted limit, the driver gets an automatic ticket, their license could be suspended, and the car is impounded immediately on the spot.
This creates a two fold problem for you and the driver. You’ll need your car back, and the driver may get their license suspended for a period of time.
If The Borrower Drives Impaired
I should say that no one should ever drive under the influence of anything, but you can only be in control of your self, and not in control of others. If your borrower drives your car under the influence, and has an at-fault or not-at-fault accident – Your insurance policy and driver rating is affected. Driving under the influence (DUI) will place limit on your insurance coverage, potentially limiting where you can obtain car insurance as if you were the driver driving under the influence. Even if your insurance company cancels your insurance policy, and you seek car insurance comparison or a totally new policy elsewhere, your DUI will still show on your driving record.
Final Thoughts
Accidents can happen to anyone, that’s why they’re called accidents. Anytime you lend your car to someone, you’re also lending your insurance. Everyone will claim that they’re a responsible driver, but you can’t be in control of their driving, and especially of drivers around them. If you choose to lend your car to someone, know what you’re getting into before hand, because car accidents can happen to anyone.
Readers, have you ever lent your care to someone? How did the experience turn out?
All the best!
Eddie
Photo Credit - Iceninejon
your topic really fine…..
That’s insane about the DUI…you’re going to have OUTRAGEOUSLY priced insurance if somebody gets a DUI and it goes on your record. Let’s just hope somebody isn’t that dumb.
Jason @ WSL recently posted..What To Do When Selling a House – 7 Things To Get it Ready to Sell
You’re never in control of anyone else, just your self.
Yup!
That one stood out for me as well.
I’ve lent my car to friends and family without a problem, but it was always for a fairly short period of time. Also with my ex there were numerous times I let her borrow it. I did understand that any of their mistakes would come back to me, but I was just willing to trust them.
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I have loaned my car to my daughter once or twice a year. I think it is like anything, the person must be responsible. I am insured and so is she. I never had a problem.
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That’s awesome Larry!
Its all about trust.
Hi Eddie,
A great topic to discuss! One of the important things to do when you want to lend anybody you car is to call your insurance and ask if your insurance policy covers another driver or not.
For example my insurance (TD Insurance) covers another driver. My friend was allowed to drive my car since I called my insurance company and found out that he is covered under my policy. But I know that’s not a case for my previous insurer…
Cheers,
Alexey
Hi Alexey,
It was a very interesting topic.
Did some research, and the findings were quite interesting.
Yes you can always call your insurance company and add your friend, but what if your friend need the car @ 11pm at night.
Tough to call your insurance company then or maybe they work 24hrs?
Cheers.
Eddie
I suppose lending a car to someone who isn’t prepared to pay you for damages is like giving someone a few thousand dollars you don’t expect to get back. Usually I feel ok doing it, but you are taking a big risk that could bite you in the…
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John,
Great narrative example. They’ve virtually identical.
Cheers.
Eddie
I lent my car to a friend once and it came back with a scratch. Now, I prefer to just chauffer around my friends instead of letting them borrow my car. :)
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That’s exactly why I don’t lend my car.
Its a situation that most of would prefer not be in.
Interesting …. As I was reading this I was kinda guessing at what the answer would be. Surprisingly I got some of them wrong. I didn’t know that if your buddy gets a ticket that it doesn’t affect your insurance.
MyMoneyDesign recently posted..How Much Money Would I Make If I Rented Out A House?
I honestly didn’t know too many of these my self, until I started looking around, searching and did some reading. Its not that I have someone borrow my car everyday, but this was definitely an eye opener.
hi
i lend my car to a friend, he was in a parkinglot, a older women was driving through the parking lot he seen her as he was backing out to leave and he stopped, she on the other hand just kept coming and hit him from behind, the damage was on the bumper where she hit it and kept going,(scuff marks and scratches) the insurance said it was my friends fault no matter what when clearly this was a older lady was in the wrong for cutting through the parking lot and she could barely see, and the damage was all from her car and none from mine, long story short, my friend didn’t have insurance so now i am stuck with this claim for 7 years and i cant get insurance cheaper.
Definitely your post provides a great and useful resource every reader must adhere. This is truly a must read and admire. Thanks a lot for sharing
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These are good points to keep in mind and find out the answers to BEFORE you lend your car. Some people don’t mind if something happens but for others, it’s a bad situation if the person you lend it to has an auto accident.
John also makes a good point to think of it as lending money and never getting it back because sometimes things happen. Great post with good ideas to think of before lending out your car.