Most drivers have handed over their keys to someone else, be it a friend or family member. Lending out your car is pretty common for vehicle owners. While you of course would only do so with someone you trust driving (or perhaps you’re giving the benefit of the doubt to a young driver in your family), as we all know, whenever anyone gets behind the wheel, no matter how stellar their driving record, there is risk involved. And accidents, heaven forbid, can happen.

In this post we’re going to touch on a very common scenario… you lend out your car, and the person gets in an accident. Barring concern over their well-being, once you have determined that everyone involved is alright, your next thought might be, how much will it cost to fix my car? And what will happen to my car insurance premiums?

The effect on car insurance premiums when a borrowed car is in an accident

When you lend out your car, you are also lending out your car insurance as well as the good (hopefully!) driving record that goes with that car. Even if the person you have lent your car to has their own insured car, when driving yours, it’s your insurance that is at play. Insurance follows cars, not drivers.

So first and foremost, what will happen to your premiums is a matter of who is at fault for the collision. As we talked about in this post, Ontario is a no-fault province, which means that drivers deal directly with their insurance providers after an incident to get compensation. However, the insurance companies will eventually come to a decision about who was at fault for the accident and will then adjust insurance rates accordingly.

So if the person you lent the car to is not at fault for the accident, no harm, no foul, at least when it comes to your premiums.

If however that person is at fault for the accident, then the incident goes on your car insurance record (not theirs) and it is your premium that is at stake. Your insurance policy will be paying out for damages and liability claims. And you will ultimately be the one paying the brunt of possible insurance rate hikes because of the accident.

So if having a cheap car insurance policy is super important to you and you don’t want to see your rates increase, you probably don’t want to lend your car out, to be on the safe side.

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Image source: FreeDigitalPhotos.net |  Naypong