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Even if you have a driver’s license, there’s a strong possibility that you won’t need a car to get around. However, you might like having the option so you can easily get to work, transport your groceries or, if necessary, get somewhere fast to deal with an emergency.

It’s also possible that one of your friends will ask to borrow your car at some point for similar reasons. When that happens, you may be wondering if your car insurance would cover any incidents they might be involved in and, if so, whether that coverage would extend to the driver or your vehicle. 

Does Vehicle Insurance Cover The Car Or The Driver?

When looking at your car insurance policy, two of the first details you’ll see are your name and vehicle identification number (VIN). That said, the terms of every policy will vary slightly depending on a number of variables, including but not limited to:

  • What type of driver’s license you possess
  • How old you and your vehicle are
  • What kind of vehicle you own
  • Whether you’re the primary or secondary driver 
  • Which province or territory that license was issued
  • What insurance company you’re with
  • What extra features you want to be included in the policy (if any)
  • How long your policy term is

Details aside, a basic car insurance policy is meant to protect your vehicle, rather than yourself. The same can be said about any drivers that aren’t technically registered to drive it. As such, if your friend borrows the car and gets into an accident, your policy would cover your car, the same way it would if you were driving it.

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If borrowing your car becomes a regular occurrence, your friend might want to look into rental vehicle insurance (known as “non-owner coverage” in certain provinces), which covers damage to any vehicles they don’t own, including yours. There’s also province-mandated liability insurance, which extends to the other driver’s medical costs. 

Don’t worry, because there are certain insurance policies that will also protect you or anyone who drives your car, so ask your insurance company about the extra features they offer before you buy your policy. 

Check out how gender affects your insurance rate   

Discuss This Policy With Your Friend

Before you allow your friend to borrow your vehicle, it’s extremely important to speak with them about certain aspects of your insurance policy. For instance, if your friend is responsible for hitting another vehicle, your liability coverage insurance can only be applicable to both cars once your deductible is paid. 

So, if you’re hesitant about lending them your vehicle, you might want to ask them about how they’d like to handle this liability if they’re found accountable for the collision. The same can be said if you’re asking to borrow your friend’s car. Otherwise, you or your friend would legally be able to borrow each other’s vehicles, as long as the driver: 

  • Obtains the owner’s permission beforehand
  • Holds a valid driver’s license 
  • Doesn’t commit offences that defy Canada’s Criminal Code while driving
  • Doesn’t use the car for anything that the policy forbids (racing, etc.)

What About Uninsured Vehicles?

Simply put, you cannot legally drive anyone’s car if they don’t have insurance, nor can they drive your vehicle if it’s uninsured, no matter where you or your friend live in Canada. In fact, if either driver gets pulled over or is involved in an accident, severe consequences may follow, such as thousands of dollars in fines, a suspended license, and even the car being taken to an impound lot, resulting in additional costs. 

That said, you are allowed to drive someone else’s car if they have vehicle insurance, and vice versa. For example, someone who borrows your car occasionally would be covered by the right type of insurance policy. However, if they drive your car all the time, then it’s probably a better idea to add their name to your current policy. 

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Before you do this, make sure your secondary driver knows that your insurance company will ask them for various personal details, as well as their driver’s history to confirm that they meet insurability requirements. Luckily, if you’re driving an uninsured car, there are some scenarios where you’ll be partially covered by your own policy.  

What If My Friend Has A Bad Driver’s History?

Unfortunately, it may be safer not to lend your car to anyone with a spotty driver’s history or record of related insurance claims. Some insurance companies will even withhold a claim if you willingly let a bad or unlicensed driver use your vehicle irresponsibly, especially if they cause an accident. 

Check out the penalties and fines of distracted driving in Canada

Essentially, every insurance policy has certain conditions that drivers must pass in order to have full coverage. If the driver doesn’t meet these insurability requirements, they’ll be considered a higher risk, so the insurer may not offer as much support following a traffic incident. It might also be harder and more expensive to have their name added to your policy, not to mention the fact that your premium will probably go up. 

Accidents And Premiums

That brings us to our next topic; what happens to your insurance premium if the person borrowing your car is involved in a collision (or vice versa)? Your premium is how much it costs for insurance per month, quarter, or year, the amount of which can vary according to several factors, such as your vehicle specifications and driver’s record. 

Click here to check out 6 hidden costs when you own a car. 

As mentioned, your insurance policy should cover any damages the borrower is responsible for. Nonetheless, it’s very important to understand that your premium will likely increase, particularly when the policy is renewed, just as it would if you caused the collision (unless the borrower is not held liable).  

What If The Damages Range Beyond Your Coverage?

This is another case where rental vehicle insurance can be a huge asset. Essentially, if the damages outweigh the amount that your policy covers, the remaining costs would become the borrower’s responsibility. 

Consider Adding A Second Driver To Your Policy

Let’s summarize our article with a couple of examples. That way, you’ll have an easier time confirming which kind of insurance policy you’ll need to buy for your friend to safely and legally operate your vehicle with sufficient coverage:

  • If your friend, spouse, or family member only borrows the car once in a while, such as during a move or an emergency, then you shouldn’t have to modify your insurance policy at all and they will be covered if an accident occurs
  • On the other hand, if they borrow your car every week, it’s better to have them added to your policy as a secondary driver, simply because there’s a greater chance they’ll be involved in any kind of traffic incident. Some non-owner policies will even cover them if the car is stolen, vandalized, or damaged in a storm.

Once again, just be aware that adding their name to your policy could cause your premium to go up, especially if the borrower already has a poor driver’s record or there’s some other reason why the insurer considers them a higher risk. 

Bottom Line

Allowing a friend to borrow your car is not always the easiest decision, especially if they plan to drive it regularly. Whatever your choice may be, it’s always important to have adequate vehicle insurance coverage on your side. Additionally, it’s a good idea to shop around with different insurance providers and tell them about your potential second driver so you can find the best premium rates!

Bryan Daly avatar on Loans Canada
Bryan Daly

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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