You lend your car, you lend your insurance…

 In Auto Insurance

If you lend your car, you lend your insurance.  If you borrow someone’s car, make sure it is insured.  I never gave much thought on either side until someone else got into an auto accident with my vehicle.

My Story

In my early 20’s, I bought a brand new car and I loved to drive it.  I loved to be the one to bring my friends places.  I preferred to be the driver.  Being young, with barely enough money for car payments, insurance and gas, I definitely did not like to pay for parking.  So, on occasion, I would have someone drop me off to work and they could in turn use my car during the day.   In those days, I didn’t think twice about lending my car to friends, as long as I knew they were a good driver.  I never asked any questions about their license (although, back then, graduated licensing wasn’t an issue; and my friends were too shy and innocent to have their licenses revoked for any reason).  And certainly, I wasn’t thinking about my insurance or the impact an accident caused by my friend would have on my insurance premiums, until after a friend got into an accident with my car.

The bad and the good

It was a good thing for me that:

  • I had the right insurance in place to help me get back to where I was before the loss occurred
  • The person I loaned my car to was a licensed driver and a good one – it was just an unfortunate accident that happened on an icy parking lot
  • That person was responsible enough to look after things for me  (at the time, that is – meaning… he helped me get my car fixed and he dealt with as much as he could on my behalf – NOTE: he didn’t help me for the next six years to pay my extra premium being charged; and no, I didn’t ask him to either)
  • The accident wasn’t serious – no bodily injuries or death; it was a two-car accident only and both vehicles were going slow due to icy conditions
  • My car was quickly fixed – not too much disruption to my life

Unfortunately for me:

  • I lent my car, and therefore I lent my insurance – so even though I didn’t cause the accident, I was the one who paid for it for the next 6 years (in insurance premiums).  Of course, this didn’t click in until my renewal date which was not until many months after the accident.

Lesson Learned

After that experience, I did not lend my vehicle to anyone else.   It sounds cold-hearted, but I now consider all of the consequences at stake here:

  • not only is my car injured and I have to deal with getting it fixed, possibly getting a rental
  • not only does my time get eaten up dealing with everything that comes along with even a simple accident
  • not only does my insurance get impacted and I may have to pay extra premium for the next six years
  • my friendship gets tested – who wants that strain?

The only people who I would loan my car to now are immediate/close family members and friends who I know will help me when times get tough.  I am also very clear, when I hand my keys over,  as to whom I am loaning my vehicle to and that no one else is to be allowed to drive it.

Remember: I prefer to be the driver, anyway.  I’ll drive my friends, give them bus or cab fare, but I don’t lend my car willy nilly anymore.

 

Other Car Lending/Borrowing Advice (you may not have thought to do before)

Here are some other important things to consider, that most likely you never thought to ask of someone before:

  • Before you drive someone else’s vehicle, make sure it is insured.  Accidents happen, and even the smallest accidents can cost you thousands of dollars.  Serious accidents can cost over a million dollars – so don’t assume that vehicle is insured; ask your friend and make sure there is proof of insurance in the vehicle.
  • For those of you who will still lend your vehicles to friends: make sure your friend has a valid driver’s license.  Don’t be shy to ask the question (I mean, they’re asking you to borrow your car) – don’t assume they have a license.  Licenses can be suspended/revoked.  Beginner’s licenses have restrictions.
  • Be clear with your consent.  Don’t assume that your friend will not toss the keys over to another person (it might be just for a minute to parallel park the car; or to sit in the idled car in case you’re asked to not double park).
  • Make sure your friend is NOT using your car for business use.
  • You do not have to add your friend as a driver on your insurance policy UNLESS you give them regular use of your vehicle.  It is always best to check with your Broker to see if your circumstance constitutes regular use.
  • Consider your situation: whether you lend or borrow a car – could you lose a friend? Could you afford if they got into a small accident?  How about a serious accident?

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A General Word of Caution – where did you get your information?

The following is general advice that we will be including in all our information blogs.

Be careful with advice that you hear on the street or even find on the internet.  The information might be wrong or it may be right, but only for the source’s province/territory/country of residence or from their particular insurance company.  If ever you are in doubt, contact your local Broker to confirm information, preferably before you have an issue or claim.

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