Who is on the hook when your friend has an at fault accident with your car?
Picture it: you’re having a lazy weekend at the cottage and everyone, except your best friend, has had a couple of beers. It’s all fun and games until you run out of ice. Someone has to do a run to the store.
Your best friend has just arrived for the weekend, coasting in on fumes but having not yet uncapped a cold one, so they offer to do a run to the store in your car. You toss them your keys and hand them a shopping list and a $20 bill.
On the way back from the store, being unfamiliar with the area, your friend has an accident with your car for which he is at least 50% at fault. Who is on the hook? You or your friend?
The Liability Is Yours
When you lend someone your car, you are lending them your car insurance too.
‘What’s this, now?’ you ask?
Your car insurance is tied to the car, not to you. Yes, you’re a named insured as the policy owner (your spouse and a teenager or two might be as well) but the policy goes with the car.
The result of that is that if someone—anyone—gets into an accident with your car, and someone else makes a claim, that claim goes against your policy, whether or not the driver of your car is named on the policy.
It gets a little complicated if we change our story a little:
Now imagine the same scenario as I described above, but the friend who offers to drive has been at the cottage for a couple of hours and has popped the cap off of a couple of cold ones.
They go to the store driving your car, they have an accident and you’re on the hook. Here’s the rub: it’s possible that your insurance will deny the claim, if your friend was found to be driving under the influence.
The Responsibility Is Yours
As the owner of the vehicle with the insurance policy tied to it, it’s your legal responsibility to ensure that anyone who drives your car is permitted and able to do so.
‘Permission’ here doesn’t just mean that they’re sober. You also need to be sure that they have a valid driver’s license (that it hasn’t been suspended for previous infractions or isn’t expired).
Going back to the scenario: imagine your friend doesn’t have an accident, but does get pulled over by the OPP because he was weaving.
Not from alcohol but because he was trying to read the GPS map on his phone to be sure to get the right turn off. As it turns out, however, his license was suspended a month ago for a DUI, a detail he forgot to mention to you before taking off in your car.
Now YOUR car will be impounded and you will be on the hook for all costs associated with that, including towing and storage.
How Can You Avoid Any Of These Scenarios?
Your first and best bet is to not lend your car to anyone. Easier said than done, right? After all, you might not think anything of lending your pickup truck to a friend who is moving, but it could be costly.
While a speeding ticket will fall to them to pay, your car could be impounded if he was going 50 km/hr over the limit. The costs and the inconvenience of getting your car back will be your own.
At the very least, you should be checking that their license is valid. You can do this online, for $2, so there’s no reason not to if you’re not sure. While you might have full confidence in your best friend, would you say the same about an employee? Or a work colleague who is running out to pick up the office take out order?
If they have an accident while driving with a suspended license, your insurance company could deny the claim, leaving you personally on the hook. And just like the rental car agency would do, check your vehicle before you lend it: scratches, dents, odometer reading and so on.
If you’re going to let someone you know drive your car on a regular basis, it’s a good idea to check in with your insurance broker about adding that person to your policy as an occasional driver.
This is particularly true if that person is living in your home, even if it’s because he or she is couch surfing for a few weeks until their apartment is fumigated.
Yes, it means higher premiums to cover them (and premiums are based on person’s driving record) but better than setting a pattern of letting them drive your car often, having an accident and watching the insurance company void your policy!
All material changes to a risk need to be reported to your insurance company, or per the tiny fine print on your policy, your contract could be voided ‘ab initio’ (latin for ‘from the beginning’, so as if the insurance contract never existed in the first place).
Finally, make sure there is a photocopy of your ownership and valid insurance in the car so that if your friend gets pulled over, they have something to show the officer.
If you lend your car and that person has an accident with it, particularly if there are injuries, you might want to check in with a lawyer to make sure that all your i’s are dotted and t’s are crossed before you deal with the insurance company.
