How Does Insurance Work When You Borrow A Car?

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In Ontario, auto insurance follows the car. It does not follow the driver. When you borrow someone else’s car, know that you are also borrowing their insurance.

The implication is if you were to get involved in an accident while driving a borrowed car, it is the car owner’s auto insurance policy that will pay for the damages. The accident record will also stay on the car owner’s insurance policy. As a consequence, their premiums will likely go up on their next renewal.

It is for the above reasons that you need to have express permission to use the car. Otherwise, the insurance company will refuse to pay for the accident damages, leaving you to foot the bill.

Just as important is to check the policy’s limits. Make sure it has the province-mandated third party liability cover. You will also want to know how much collision coverage the car carries.

If you are borrowing the car for a long-distance trip, it is wise that the car has sufficient comprehensive insurance in case it gets stolen or suffers other non-accident related damage.

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Instances Where The Insurance Company May Still Withhold Coverage

There are instances where the insurance company will still refuse to pay claims for an accident you caused, even if you had the owner’s permission to use the car.

The car owner's insurance may not apply if:

  • You’re a frequent user of the car you are borrowing,
  • You use the borrowed car to run business errands,
  • You’re a member of the car owner’s family and occasionally use the car

If you regularly use the car you are borrowing, the auto insurance carrier will require that you be named as a driver under the policy's permissive driver clause.

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Similarly, if you are a member of the car owner's family and you occasionally use the car, you will have to be named as a driver on their policy.

The insurance company will want to put you through the same approval process as the car's owner.

Where you're borrowing a car to run business errands, be sure that the car is protected with a commercial auto insurance policy. A standard auto insurance policy will not payout if you get involved in a collision with the borrowed car, even if you had the owner's permission to use the car.

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Do I Need Car Insurance If I Borrow A Car?

You do not need to carry your own insurance to borrow a car. By borrowing a car, you will also be borrowing the car owner's insurance. Of course, the car needs to have an active policy.

Importantly, you will need to have a valid driver's license and be legally allowed to drive in Ontario. If you've neither a valid driver's license nor legal permission to drive in the province, any claim for a collision you cause will be rejected. The policy will also not payout if you were conducting an illegal activity with the car.

Before you get behind the wheel of a borrowed car, be sure that the owner’s insurance policy will cover you if you get into an accident. Also, if you realize you are now frequently borrowing the car, it is best that the car owner updates their policy and adds you as a permitted driver.

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Avoid the risks that come with driving without insurance cover.

Able Elite Team’s auto insurance experts are here to walk you through all your options. Contact us here for a free consultation.

Get A Quote
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