Lending Your Car
If you lend your car, you lend your insurance. Another driver can seriously affect your insurance rates. Their tickets are their problem, but their accidents are your problem.
Here’s Who Can Drive Your Car: You can lend your car to anyone who has a valid driver’s license, as long as they are not an excluded driver on your policy.
Ensure Their Driver’s Licence Is Valid: Many drivers are unaware that their licence has been suspended. YOU might be one of them.
Here are 3 examples of situations that could cause a driver's license suspension:
1. You missed renewing your driver's license. (It usually renews on your birthday).
2. You did not pay a traffic ticket.
3. You missed your child support payments. (In this case, your driver's license can be suspended without written notice. This is true in many provinces and states, and many drivers are unaware of this law).
If you lend your car to someone whose license is suspended, and they have an accident, your insurance company is not necessarily liable to pay for the damages caused by an unlicensed driver.
Lending Your Car To A Driver In Your Household: You can lend your car to anyone with a valid driver’s license, and they would be covered. If the driver lives in your household, typically an insurance company would want them to be listed on your policy. This lets the company know if there’s an additional risk associated with insuring your car.
Adding A Driver To Your Policy: It’s good to know that adding another driver to your policy should not increase your rate if they’re over 25 years old and have a clean driving record.
If the driver is a "young or new driver", then your rate may go up. If the driver has multiple tickets or an accident, your rate will go up. The insurance company may do anything from adding a small surcharge to wanting to cancel your policy.
If Your Friend Has An Accident While Driving Your Car, Here’s What Happens: If you lend your car and that driver causes an accident, that accident is charged to your policy. It's as though you were driving the vehicle yourself.
Will My Insurance Company Try To Recover The Cost Of Damages From My Friend? If you lend your car and your friend has a valid driver’s licence the insurance company will not attempt to recover the cost of the claim. However, the accident affects your insurance rate, not your friend's rate.
This is only true if you are in a "no-fault" province or state. If you are not, the insurance company may attempt to recover damages from the driver responsible for the accident.
What If My Friend Gets A Ticket While Driving My Car? Any tickets would be your friend’s responsibility and will not affect your insurance.
What If My Friend Is Found Drinking & Driving My Car? If the driver is impaired and you knowingly let him drive your car, then your insurance will not pay for the damages, and only limited coverage is available for injuries. If you lend your car to your friend who is “not” impaired, but later becomes impaired and is involved in an accident, the insurance company will pay for all damages. But the insurance company may sue your friend for their costs.
I Don’t Want Them Driving My Car
Excluded Driver Endorsement: The Insurance Act states that the named insured or policy owner may sign an endorsement, which excludes a driver from their insurance policy. This is usually done to protect the policy owner from paying higher rates because of the driving record of someone in the household.
If the excluded driver is caught driving the car, they can be charged with driving without insurance.
By signing the endorsement, the insurance premium is almost always reduced, as there has usually been a cost involved for keeping this driver on the policy. It is important to know that any accidents the excluded driver had incurred previously will still affect your insurance rate.