When friends or family members ask to borrow your car, you may be inclined to agree without giving it much thought. While it is legal to lend your vehicle in Ontario, it’s important to understand the potential risks before handing over the keys.
Before you lend your vehicle to someone else, it is crucial that you are aware of that person’s driving abilities and driving history, and that you can trust the driver. Be sure to set clear expectations as to when and under what circumstances the borrower may use your vehicle.
If you do lend your vehicle, you should keep the following in mind.
1. If you regularly lend your vehicle to someone, consider adding them to your insurance policy as an occasional driver.
In Ontario, when you lend your vehicle to another driver, you are also lending your automobile insurance to that person.
If your friend or family member is involved in an accident for which he or she is found to be at fault while driving your vehicle, your insurance premiums may increase. These increases can stay with you for several years.
If a person residing with you wishes to borrow your vehicle or if you lend your vehicle to someone on a regular basis, it is prudent to consider adding that person as an occasional driver under your insurance policy. If a borrower is not listed on your policy and he or she drives your vehicle regularly, your insurer may deny claims for accident benefits.
2. Make sure the person borrowing your vehicle has a valid driver’s licence.
If you lend your vehicle to someone who does not have a valid driver’s licence, including someone with a suspended licence, there may be serious consequences. In these circumstances, there is a possibility that the insurance company will not respond to the claim. This could result in several scenarios, including the injured party having nowhere to turn for compensation to assist with rehabilitation or missed time from work; or the owner of the vehicle being held responsible for damages and injuries arising from an accident.
3. Store copies of your registration and insurance details in the vehicle and inform the borrower of their location in case something happens.
Generally, if someone is charged with a traffic violation while driving your vehicle, dealing with the consequences will fall on his or her shoulders. In other words, that person’s insurance will be affected and he or she will be responsible for paying any fines or charges. However, if someone is caught speeding in excess of 50 KM/H over the limit, the vehicle may be impounded. If that vehicle is yours, you will be tasked with the inconvenience of arranging for its return.