Lending your car: How does insurance work?
Your friend Simon is a good driver…except when you lend him your car. Accident, total loss… Now what happens? (Apart from lending him your bus pass next time.)
If you’re like almost half of Canadians, you don’t know what happens after this kind of accident. A claims centre agent answers this key question. But our best tip? If you need to add someone to your car insurance policy, do it through our app. It’s quick, simple and convenient. Download it here.
Slice of life
“One day, one of my coworkers who doesn’t have a car needed one to do some shopping. He asked if he could borrow mine. I agreed, figuring that people lend their cars all the time. As it turned out, he ran a red light and was involved in a collision. My car is a total loss. My coworker doesn’t carry car insurance. Am I covered for this and how will this affect my insurance?”
A response from Melanie, Claims Centre Agent
“Despite your friend driving your car and getting into an accident, the damage may still be covered under your own car insurance policy, depending on the type of coverage you carry.”
Who pays what?
For this particular incident, in which your friend is responsible for the accident, you would have to be carrying collision insurance (Section B2) in order for the damage to your vehicle to be covered, whether it is a total loss or simply requires a repair job. A deductible will apply.
Update your conditions
Insurance companies such as belairdirect will only add an additional driver if they’re a regular and frequent driver. That’s why it’s important to notify us, so that we can check whether your friend should be added to your policy as a driver and to confirm your permission to have them drive your car.
A file that will follow you
Even though your friend doesn’t have an insurance policy in their own name, a record of the accident will be entered in your friend’s file in a database of claims information, such as the AutoPlus system in Ontario. In this situation, the claim will show up on AutoPlus under the vehicle owner. If your friend eventually decides to get their own car, this incident will also show on their AutoPlus history. Essentially, the claim will follow both the driver and the vehicle owner.
If your friend had injured a pedestrian, there are rules as to which policy provides compensation and when depending on your province, and payment will be made in accordance with these rules.
To loan or not to loan?
In summary:
- If you allow someone to drive your vehicle, you must first ensure they hold a valid driver’s licence. That way, the person will be covered by your car insurance as if it were you driving. The same limits, deductibles and conditions apply. You will therefore also be responsible for any accidents (claims).
- If you allow someone else to drive who does not live with you, there is no need to notify us unless they will be driving frequently over a longer period. It is your responsibility, however, to ensure that they have a valid driver’s licence before allowing them to drive.
Have another question? You can send it to us in a private message through our Facebook page!
Learn more about liability coverage and how it could protect you from paying for property damage.
