Lending your car to a family member or friend happens frequently. It could be that your friend Paul needs to borrow your truck to pick up furniture or your girlfriend, Josie, needs your car to get to her part-time job across town on the weekend. But what happens if your vehicle is involved in an accident? And how many times can you lend your vehicle to someone before they need to be added as an occasional driver on your car insurance policy? Before you hand over the keys, you should understand the possible implications of lending your car to others when it comes to your car insurance. If you’re wondering “who can drive my car under my insurance?”, we’ve got answers.

Who can drive my car legally?

As the named policy holder of your car insurance, you can let someone else drive your car and they will be covered under your insurance policy. Usually, a policy is issued to a specific vehicle, identified by its unique Vehicle Identification number or VIN.

Under certain circumstances, you can lend your car without naming a guest driver on your insurance policy. If you decide to lend your vehicle, keep the following in mind:

  1. Are they licensed to drive in Canada?
  2. Do they have your permission (verbal or written) to drive your vehicle?
  3. Will they stick to the rules outlined in your policy?
  4. Would they participate in illegal activities while using your vehicle (e.g., street racing or drinking and driving)?

Be aware: If you lend your vehicle, remember that you also lend your insurance record.

Lending your car can be very risky. You’ll want to consider your individual situation before you hand over the keys. In our above examples, lending your pickup truck to a friend for a few hours to move a couch is a lot different than letting your girlfriend borrow your car to go to work once a week. If the person will be driving your car regularly, or they live in the same household, you are obligated to inform your isure broker of this change.

Before you hand over the keys…

Let the guest driver know where they can find the car registration and proof of insurance in your car. Typically, car owners will keep such paperwork in the glove box or center console of the vehicle. Be clear where yours is, should they need it.

Establish any rules for borrowing the car, such as no eating or drinking in the car and no street racing. While it may go without saying, you should be specific that the car is being lent to only them, meaning no one else can drive the car.

Make sure your car is in good shape before handing over the keys. You don’t want the borrower to run into any difficulties while driving your car. For a quick trip to the store, this is not as important as say a full day of moving furniture several kilometres.

Does automobile insurance follow the car or the driver?

There is a fair amount of confusion over this idea of coverage. A basic auto insurance policy issued in Ontario lists both the car by VIN number AND the policyholder by name. Your comprehensive car insurance or Third Party Car Insurance policy is only attached to your vehicle. It doesn’t follow you when you drive other people’s cars, unfortunately.

For someone else to be covered while driving your vehicle, they need to be on your policy as a listed driver.

Lending your vehicle – Incidental vs. Regular use   

When you lend your car to another driver, you are also sharing your auto insurance. Typically, a guest driver is also covered under your policy. However, using another person’s car regularly changes the situation. The difference between regular use and incidental can be illustrated by looking at the two previously mentioned lending situations:

  1. If Paul borrows the car once every few months on an irregular basis to run errands, the car’s use is incidental, and therefore, Paul remains protected under the car’s insurance policy with no further action.
  2. Josie, on the other hand, borrows the car every Saturday night. This becomes regular use and the policy should carry Josie’s name and driver’s license information. Once regular use begins, the insurance company must be informed. It’s up to your insurer to determine whether this driver affects the policy’s premium. If determined to be necessary, Josie’s personal information and driving history must be listed.

Who would be considered an occasional driver on my policy?

Every insurance company has its own set of requirements that specify when you need to identify someone as an occasional driver on your car insurance policy. As a rule of thumb (using our scenarios from above):

  • Josie should be included as an occasional driver on your insurance policy because she borrows your car on a regular basis (once or twice a week, for example).
  • But for Paul, an incidental driver who rarely asks to borrow your car (less than once a month, for example), it may not be necessary to add them to your policy.
  • There is one standard exception to this rule: If the driver who wants to use your car only has their learner’s permit and is driving under the required supervision, they generally don’t need to be added as an occasional driver, no matter how often they will be behind the wheel.

Check with your isure broker if this exception applies to where you live. It is important to let your insurance company know that a new driver may be practicing in your car.

What happens if the person borrowing my car is not a good driver?

It is important to keep in mind that when you lend your vehicle to someone, you are also lending your insurance record. Does the borrowing driver have a poor driving record or insurance claims history? If so, you should use your discretion as to whether you should lend them your vehicle.

Insurance companies vet potential drivers for one of their policies by observing their driving record and claims history. Your insurer may exclude them from driving the vehicle if that person fails the company’s insurability requirement. As the policyholder, you have an obligation to assure responsible use of your vehicle. If you know that a driver is high risk, you should probably not lone them your car. If the insurer proves that such risks were known, they could potentially hold back claims you may need to file as a result.

Can someone else drive my car without insurance?

The term “without insurance” can have several meanings, and the answer to this question can vary.

If you do not have insurance at all then no, absolutely not. In Ontario, driving without insurance may cost both the owner of the car (you) and the driver up to $50,000 in fines, license suspensions and even vehicle impoundment!

However, if your friend or family member that asks to borrow your car doesn’t have insurance but you and your car are insured then yes, you can. Incidental or random use drivers can borrow vehicles and the vehicle insurance will extend to cover them. However, motorists who drive another person’s car on a regular basis likely need to be listed as occasional drivers on the insurance policy.

What happens if the person borrowing my car gets into an accident?

In most cases, if you give permission to someone else to drive your car and they are involved in an accident, your insurance will likely cover the costs. That’s because your policy will be the primary insurance, whether or not you were in the car with them at the time. They will be asked to show proof of your auto insurance.

Remember: Insurance follows the car. Even if the other driver has their own insurance, your policy will still be first in line to pay the claim. Therefore, you might have to pay for any damages to the car itself, as well as pay the deductible on the claim.  You could also be risking your good driving record and claims history. All of this could cause your car insurance rates to increase on your next renewal. Being a good friend is important, but protecting your good driving record should be just as important.

Material misrepresentation

There is one other scenario that you should be aware of when lending out your vehicle and an accident occurs. While investigating the claim, your insurance company could determine that the borrower, in fact, qualifies as an occasional driver. If you don’t disclose all the drivers who frequently drive the car to your insurance company, you would be seen as withholding information. This is known as material misrepresentation, and it will result in denied claims and/or policy cancellation.

When you let someone borrow your car, it means you’re letting them borrow your insurance, too. Doing a favour for a friend could be a lot costlier than simply the gas they are using. Always make sure they understand the responsibilities that come with it. When in doubt, it’s always a good idea to check with your isure insurance broker. They are there if you have any questions about who can drive your car under your insurance. as well as offer information about coverages available.

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