Lending your vehicle: auto insurance & borrowing vehicles
Your neighbour is taking their family for a trip down to the lake this weekend. However, their minivan is out of commission for repairs. Their vacation is at stake. You, being the kindly neighbour that you are, offer to lend your vehicle out to them for the two or three days. No big deal, right? Well, here’s the thing:
When you allow someone not listed on your policy to take your vehicle out for a spin, you are also sharing your auto insurance. This is because your auto insurance follows the vehicle, not the individual driver. In most cases, a guest driver would be covered by your auto insurance policy. The keyword here is “guest” – i.e, someone who isn’t using your vehicle every Friday night to go visit their aunt two hours away. However, this also means that if the guest driver gets into a collision while operating your vehicle, your premiums may be directly impacted. As you may know, the more accidents or traffic violations you have, the likelier you are to see higher rates.
Should you lend your car to a neighbour, friend, or family without having them named as an occasional driver on your auto insurance policy? Depending on the circumstances, maybe. But there are a few things you should keep in mind.
First of all, you need to agree either verbally or in writing that the driver is allowed to use your vehicle. Secondly, if you do plan to lend out your vehicle to this person – friend, family, neighbour, coworker, etc. – on a regular basis, you will need to name them as an occasional driver on your insurance policy. Update your policy to reflect this or call up your insurance broker to inform them of the change. Finally, whoever is borrowing your vehicle must have a license and must be legally allowed to drive in Quebec. If you are lending out your vehicle, you are also lending out your auto insurance!
Remember: accidents happen.
There are always risks that come with operating a motor vehicle. Even the best of drivers will get into accidents sometimes. When you lend out your car and your auto insurance, you are exposing yourself to the possible liability that may or may not have coverage under your auto insurance or exceed your existing liability limits. If your friend is injured while driving your car or injuries the occupants of another vehicle, any difference of the amount that the court awards which exceeds your insurance will be your responsibility to pay. This can range into the hundreds of thousands of dollars.
Ask yourself about the individual who you are considering lending your car to, as you are putting yourself at risk of being found financially responsible. Both your insurance rates and your relationship with that person may be at risk. Consider if the person you are thinking about lending your vehicle to has the following:
- Previous traffic violation tickets?
- A reputation for reckless driving?
- A history of at-fault accidents?
- Poor driving habits?
Even if the person you are considering lending your vehicle to is your best friend or even a family member but they exhibit poor driving habits, have numerous past traffic violation tickets or have been involved in several at-fault accidents, you may want to reconsider lending your vehicle out to them. Moreover, if this person wants to use your vehicle on a regular basis, it will not be covered by your auto insurance. You will need to ask your broker to update your policy to reflect this with your friend named as an occasional driver.
Anyone who uses your vehicle on a regular basis, such as adult children, roommates, parents, etc., should be listed as occasional drivers on your policy.
Questions to ask yourself:
In the end, it is your decision whether or not to lend your automobile and your insurance to someone else. Consider the driving habits of the person you are considering letting borrow your car, the potential impact it could have on your future premiums, and finally ask yourself if you are ready to take full responsibility for the actions of the person you are allowing to borrow your vehicle and pay for any unsatisfied judgements that do not have coverage by your insurance. Your savings may be at risk.
If you are still unsure, consider asking your auto insurance broker for advice on the situation. They may provide you better insight into what steps you should take. They may remind you of the possible consequences that could come of letting your friend borrow your vehicle and advise you on what you can do to preserve your future rates and keep your risk low.
You can request the advice of a professional auto insurance broker by getting in touch with Panda7 today or apply for an auto insurance quote.