Among the most frequently asked questions by people buying auto insurance in Toronto is whether their insurance will still hold if they lend their car to a person who is not listed as a driver on the policy.
Specifically, car owners are anxious about what will happen if the person they have lent their car gets involved in an accident. Will their own policy cover liability for the accident? If it does, how will it affect their premiums?
Under Ontario Law, Auto Insurance Follows The Car
Generally, under Ontario law, auto insurance follows the car and not the driver. If you lend your car to your neighbor or work colleague, know that liability for any accident they may be at fault for falls on you, the car owner. It is you the car owner’s auto insurance policy that will cover the cost of any liability while another person is driving your car.
What happens If a Person Who Has Borrowed Your Car Gets in an Accident?
Lending your car is perfectly legal in Ontario. And, of course, when you lend your car to someone you don’t expect they will get involved in an accident. However, that is one of the risks you have to be aware of.
Granted, your car’s insurance policy will generally cover the damages and any other liability from the accident, depending on the extent of coverage. But it is paramount that you check whether your insurance company will release accident benefits for an accident that happens when someone other than the person in whose name the policy is registered.
What Are The Consequences When A Person Who Has Borrowed My Car Causes An Accident?
As auto insurance follows the car and not the driver, the resulting accident record will also stay with the car. In fact, your insurer may increase your premiums. So before you hand your keys over to the person borrowing your car, you will want to make sure of the following:
Ensure the person is a skilled driver
You should make sure the person borrowing your car can drive safely. You also need to be aware of their driving history. If you know they have caused accidents before, it is in your best interest not to lend them your car. In other words, do not lend your car to a person whose driving abilities and history you are not sure of.
Be sure that the person has a valid driving license
As auto insurance stays with the car, know that when you lend out your car you are also putting your good driving record on the line. But the conversation changes when the person you are lending your car to has no valid driver’s license. Your insurance company will most likely refuse to cover any damages from accidents the car gets involved in.
Remember, too, that even if the person does not get involved in an accident it is an offense to lend your car to an unlicensed driver, just as it is also illegal to drive a car without a license. If an unlicensed driver gets caught driving your car, both you the car owner and the driver will be staring at fines of up $50,000 each, on top of other penalties.
Consider Adding Family Members Who Regularly Drive Your Car To Your Auto Insurance Policy
If your child, spouse, or a relative that lives with you regularly use your car, consider adding them to the car’s insurance policy. You will, of course, want to make sure they have a license and can drive safely.
If you decide to exclude a person from your policy but still allow them to drive the car, your insurer will refuse coverage if the person causes an accident. You will have to pay for damages from your own pocket.
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