Lending your car to a trusted friend or family member can seem like an easy decision. But even if their record is clean and they have never been in an accident before, there is always that risk. So what happens if they get into a crash while borrowing your car?
How Insurance Works
Your car insurance is tied to your car, not you. If you let someone borrow your car, you are essentially lending them your insurance too. Even if your friend or family member have their own insurance (with better or worse coverage), it will not apply if they get into an accident while driving your car. However, in certain situations their insurance may be applied as a secondary source. For example, if the accident causes $30,000 in property damage and your insurance only covers up to $25,000, your friend or family member’s insurance would cover that remaining $5,000.
By giving someone “permissive use” to use your vehicle, you assume all the risk of them driving your car. Permission does not have to be written — verbal consent is enough for your insurance policy to cover their potential accident. To be on the safe side, read the fine print of your insurance policy to see exactly what will happen if you let someone else drive your car.
But what happens when someone drives your car without being given permission?
Driving Without Your Permission
If someone drives your car without consent, in most cases, you will not have to pay for any damages from your own insurance coverage. This is called “non-permissive use”. Whether it be a friend who takes your car without asking or a thief who steals it — in those cases, their insurance policy will cover the their liability first, not yours. However, you may not be off the hook for all of the costs. According to Ontario car accident attorney, Mike Montgomery, most insurance policies will take the stance of that, because you generally know this person (a friend, in this case), you did give them permission — unless you specifically named them in your policy as someone not allowed to drive your car.
Things to Consider Before Letting Someone Borrow Your Car
After checking your own insurance policy to see what it says about someone else driving your car, you may want to consider some additional criteria when making a decision. Check to see if the other person:
- Has a valid driver’s license
- Has their own insurance coverage
- Lives in a different state
These factors can make a difference when it comes to your liability. For example, letting your best friend with insurance coverage borrow your car is much less of a risk than someone uninsured living in another state borrow it. As a fail-safe, always keep your vehicle’s registration and insurance policy in the glove box. That will make things a lot less complicated if a friend or family member gets into an accident with your car.
In most cases, someone who borrows your car with your permission will be covered by your insurance policy. If someone steals your car or drives it without permission, their insurance policy will likely cover the initial costs, with your policy covering the rest of the costs, if any. And if you have a friend who borrows your car on a regular basis, consider adding them as a named driver to your insurance policy. This will make dealing with insurance companies much easier in the future.