Am I Covered If I Lend My Car?

We have all lent our cars to friends to help them out or if they are the designated drivers. First, it is important to remember that when you lend your car to someone, you are also lending out your insurance policy. Here is what you need to know before you hand over your car keys to someone else!

Do Not Lend Out Your Vehicle to Just Anyone

It is important to trust those whom you allow to drive your car. The people who drive your car occasionally, but on a regular basis, must also be included on your insurance policy. This is due to the fact that it influences the level of risk for the insurer. That being said, those who drive your car on an exceptional basis do not necessarily need to be added to your policy.

Before giving your verbal or written permission, go over a few things with the drivers:

• Confirm that the people to whom you lend your car actually have a valid driver’s licence.
• Ask them where they plan to drive to.
• Show them where you keep your proof of insurance and registration in your vehicle.
• Ask what they plan to use the car for, since delivery and taxi services are not covered by your basic insurance policy. The compensation you would receive in the event of a claim could be at risk in these cases.

Your Children With a Learner’s Licence

If you have children who have recently obtained a learner’s licence, you must add them to your policy as secondary drivers of your vehicle. Due to their lack of driving experience, your insurer will, as a result, adjust the risk that they represent, as well as your annual premium. The benefit of adding them to your policy, in addition to having more complete coverage for your vehicle, is that your children will have insurance experience that will be recognized in the future when they purchase their own auto insurance for the first time.

Accidents

As mentioned earlier, when you lend your car to someone, you are also lending out your insurance policy. In the event of a claim, the insurance policy can be used, no matter who is behind the wheel. There are two possible situations:

1. Not-at-fault accidents: Your friend is involved in an accident with your vehicle, and he is not at fault. You would thus be reimbursed for the damage, even if you only have civil liability coverage.
2. At-fault accidents: Your friend is involved in an accident, and he is at fault. You would thus only be reimbursed if you have purchased Section B damage insurance (or two-way insurance) or if your friend has his own insurance policy with complete coverage with a Q.E.F. 27. Then there is still the matter of who pays the deductible.

We suggest that you decide with your friend ahead of time who would pay the deductible in the event of an accident. However, no matter which insurer ends up compensating you (yours, through your policy, or your friend’s, through his Q.E.F. 27), the claim will only be recorded on your friend’s driving record.

All that’s left to do is to notify your broker about any changes to the use of your vehicle. That way, you can avoid some unpleasant surprises in the event of a claim!