The short answer: Yes. Your auto insurance policy covers your car, not the person driving it. If someone borrows your car and crashes it, your insurance will cover the losses — however, your premiums may increase.
Insurance applies to the car
An insurance policy relates to the specific car you insure when you sign up for coverage. A standard policy follows the car, not the driver, because the vehicle is required by law to be insured if it used on public roads. If someone other than the car’s owner or the person named on the policy borrows the car and is involved in a collision, in most cases will kick in and pay for damages — so long as the car is being driven legally. If the car is stolen, if the driver doesn’t have a license, or if it’s being used for illegal activity, coverage will likely be voided.
Impact on your premium
When you share your car, you also share your insurance. If they crash and are at fault, your insurance will cover the damage — and, consequently, your insurance premium will likely climb. Anyone can borrow your car and be covered by your insurance, so long as they have your permission, have a valid licence, and are using it legally.
Adding other drivers
If a friend or family member uses your car regularly, your insurer will require them to be added to your policy as a named driver. A friend who borrows your car once every few months will not need to be named on your policy, but a friend uses your car every Monday to do their shopping, for example, will be deemed a regular driver and your insurer will want to know about them. Their personal information and driving history will need to be recorded — the possible drawback here is that your insurer could decide to charge you more to cover additional named drivers, if the insurer evaluates their driving risk as higher than your own.
Additional non-owner driver insurance
It is possible to modify or add to a policy, to allow a driver the same policy terms they enjoy on their own car when they drive other cars — such as borrowed cars and rentals. This is called non-owner coverage. In provinces such as British Columbia, Manitoba, and Saskatchewan, a driver can buy this as a standalone policy. In other provinces such as Ontario, you can only buy this insurance as an add-on to your own auto insurance policy. Drivers who rent or borrow cars regularly might consider this option if they want to carry more liability coverage — if a driver crashes a borrowed car and the damages incurred are higher than the car owner’s policy limits, the remaining costs will fall on the driver. In such cases, additional non-owner coverage would be beneficial.
Ask your insurer
Of course, insurance rules can vary by policy and province. If your situation changes or you have specific questions about your policy, you should speak to your insurer or broker before loaning out your car.
Photo: Matthew Henry (Burst)
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