Why who you lend your car to is important

The majority of Canadians have lent their car to a neighbour, friend, roommate or family member. Usually, this lending occurs without a thought – as long as the borrower has a driver’s license and promises to drive safely, why should you even give it a second thought? Unfortunately, who you lend your car to is very important because a mishap could affect your insurance rates for years to come.

Car Insurance

Rather than thinking of your auto insurance policy as a policy that covers you, think of it as a policy that covers your vehicle. When borrowing or lending a vehicle to or from another driver, it isn’t the borrower’s insurance policy that covers the trip, it is the car owner’s. In short, your auto insurance follows your car.

Because your auto insurance follows your vehicle, you have to be sure that the person you lend your car to will drive it in a safe and courteous manner. This is important because, if the worst should happen and the borrower is in an accident, the accident will appear on your insurance record, not the borrower's.

A borrower having an accident on your insurance record has the same effect as if you had the accident yourself – lending your vehicle to the wrong person can mean increased auto insurance payments for years to come.

Before lending your car

Before you hand over the keys, you should take a few minutes to reflect on what the would-be borrower is asking of you. Here are some things to think about before lending your car to someone:

• Do you trust this person to drive safely and defensively?
• Consider the driver: has he shown safe driving behaviours in the past? Does he have a clean driving record? Is he a focused and diligent driver?
• Is the vehicle in good working condition? How are the brake lights, turn signals, oil and gas levels, etc.?
• Would you feel comfortable with the consequences of this driver having an accident in your vehicle?

Regular lending

Finally, remember that these rules only apply if you infrequently lend your car to another driver. If you regularly lend your vehicle to another driver that person could be considered an occasional driver. Occasional drivers should be added to your auto insurance policy.

Drivers who borrow your vehicle regularly and who are not added to your policy as occasional drivers have not had their driving records assessed by your insurance company. If there’s an accident and your insurance provider finds out it was caused by an unreported, frequent borrower (or, an undeclared occasional driver), your claim could be denied entirely.

Think about it, first

Lending your vehicle to someone seems like a no-brainer sometimes – your friend is looking to get out of town for the weekend and needs a ride, or your brother’s car is in the shop, and you can easily get to work on the bus. However, who you lend your car to is important because your auto insurance policy follows your car and an accident could negatively impact your auto insurance rates for years to come.