Important Facts About Lending Out Your Vehicle
When your brother calls to borrow your truck to pick up some trees from the local nursery, or your niece asks if she can take your car to the mall, unless they tend to be completely unreliable people, chances are you’ll say yes, and not even think about the potential impact on your car insurance.
As you’re passing off the keys, you should be aware of your responsibilities as the vehicle owner, and the driver you’re lending your vehicle to should also be aware of their responsibilities when they’re behind the wheel.
Your insurance goes along for the ride
If you lend your vehicle out, it’s your insurance policy covering the vehicle and the driver, not theirs. So, if they get into an accident, regardless of the severity, it’s your policy premiums that might take the hit come renewal time – even if the borrower has coverage for another vehicle.
Let’s say your friend gets into a collision while using your pickup. That claim will have to be filed with your insurance provider, and it goes on your insurance record, not theirs. So, in reality, you’re not just lending them a vehicle, you’re also trusting them with your insurance record and policy.
Now, if they get a ticket for something like speeding while driving your vehicle, it will be in their name and go on their driving record, and your insurance won’t be affected. But if they are involved in a moving violation that involves roadside penalties, such as the driver of your car driving impaired or driving at an excessive speed, it could still lead to your vehicle being towed and impounded.
Keep in mind that if whomever has your vehicle is found to be at fault for a collision, you’re at fault from an insurance perspective, even though you weren’t there. As the vehicle owner, you could end up paying additional costs due to your deductible or higher insurance rate. You may even end up paying out any damages and liability claims as a result of a collision for which you were never present.
Finally, if your vehicle is stolen while in the care of your friend or relative and you have comprehensive coverage, you’ll be covered for the loss no matter who was driving it last. While it’s unlikely your premium would be affected by the insurance claim, you’ll still have to pay the deductible.
Establish ground rules when lending someone your car
Of course, most of us are willing to help out a friend or relative, but no matter how long you’ve known someone, or what kind of connection you have, it’s only prudent to qualify any driver when you loan them a vehicle.
- Make sure the borrower has a valid driver’s licence for the province or territory that you both live in.
- Clearly explain your rules for anyone who borrows your vehicle: speed, smoking or eating etc.
- Prepare them to drive your vehicle so they’re comfortable finding everything, such as windshield wiper and cruise controls.
- Show them where you keep the registration and proof of insurance.
- Inspect the vehicle together before it’s lent out by checking that all signals, brake lights, and other important functions of the car are in good working order.
- Record the mileage so you’ll know whether the agreed-upon usage for the vehicle is being exceeded.
Be selective about sharing your vehicle
Suppose you’re going to lend your vehicle out to the same person regularly. In that case, you may consider adding them as a secondary driver to your insurance policy, especially since you’re lending them your coverage anyway.
If a borrower is not listed on your policy and drives your car regularly, your insurance provider could deny a claim. A secondary driver is someone who drives the vehicle less than 50% of the time. You’re the primary driver.
Similarly, if you need to borrow someone else’s car, you should have the same discussion, and be sure the vehicle is adequately insured, so you don’t get stuck with bills or held liable if you’re in a collision.
Remember, when lending your car, you’re also lending your car insurance. Whoever borrows the vehicle needs to respect your rules and understand the responsibilities that come with it.