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Sure, you can borrow my car — but are you insured?

Jan. 19, 2022
3 mins
Couple driving in their car

Picture this scenario: your friend asks if they can borrow your car to drive up the road to get some food. But what if your friend were to get into a collision on the way? Do you know if your auto insurance will cover that collision? What if your friend doesn't have insurance?

Chances are you wouldn't think through all of these scenarios before handing over the keys to your car, but they are crucial to consider when it comes to filing a claim. So, the next time you lend your car make sure you know the answers to the following questions:

Is auto insurance attached to the car or the driver?

It is a common misconception that insurance follows the driver, when in fact insurance covers the car. So if you do lend your vehicle, that person is covered under your insurance policy — not theirs. Conversely, if you were to drive their car, you would be covered under their insurance.

However, this means that even though another person was driving your vehicle and got into a collision, it’s your policy that will respond and your rate that could be impacted.

Does my guest driver have to meet any requirements?

To meet the coverage requirements, your guest driver will need to have a valid Canadian driver's licence. The guest driver also must have your expressed permission to drive the vehicle, whether through a written or verbal agreement. The driver also must not be committing a criminal offence or engaging in a prohibited activity while driving, such as racing. Be sure that a guest driver has access to your proof of insurance in case they are in a collision or are pulled over.

Will my insurance go up if a guest driver gets into a collision?

If the driver of your vehicle is in an at-fault collision, don't be surprised to see your rate go up. Although you weren't behind the wheel, your decision to lend your car to a driver makes you a higher risk in the eyes of your insurance company and therefore subject to a greater insurance premium.

What if the person driving my car doesn't have insurance?

If the person driving your car has an at-fault collision, your insurance covers the vehicle, whether they have their own auto insurance policy or not. Legally, they are allowed to drive your car without having their own insurance policy, but where things can get a bit complicated is if they are in a very serious collision and the damages exceed your coverage limits. If the guest driver has liability coverage, then their insurance could pay secondary to your policy. If they don't have insurance, any damages you owe over your coverage limit would end up being your responsibility.

How often can I lend my car to the same person?

If you are lending your car to your friend on a daily or even weekly basis, you really should just add them to your insurance policy as an occasional driver. If they were to get in a collision and it is established that they frequently drive your car, your insurance may have grounds not to honour your claim.

The rules may vary from provider to provider on how often a driver needs to borrow your car before you need to add them to your policy. When in doubt, it is best to ask. With the answers to these questions in mind, you can better decide whether to agree to lend your car to another driver or not. Remember that the person driving is covered by your insurance, and if they are in a collision it could potentially affect your future rate. Only lend your car to someone you trust and make sure you have the best car insurance policy by comparing quotes on RATESDOTCA.

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The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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