Myth: I’m covered by my Car Insurance if I lend my Car to someone and they have an At-Fault Accident.
Contrary to popular belief, in case of an accident, car insurance follows the car — not the driver. So if you lend your car to a friend or a visiting relative, you could be liable if an accident occurs. People get confused on who exactly auto liability follows; is it the driver or the car. To help solve such mysteries and many more, companies in auto insurance Canada have designed a few guidelines.
When purchasing car insurance, collecting accurate information is very important as it helps determine your insurance coverage. In an industry surrounded by a number of myths, the importance of factual information can never been overemphasised. The aforementioned myth is one of the most common myths causing lots of confusion in the insurance industry. With all the demands by insurance companies, purchasing automobile insurance is always a challenge.
Provinces in Canada advice that all drivers should carry at least a minimum level of liability insurance, but that does not necessarily mean you are covered if you lend your car. When you lend your car, you are also lending your policy. This simply means that in case you lend your car to a friend and they get an at-fault accident, the insurance claim will go through your insurance company first as opposed to your friends. This is because the insurance policy covering your vehicle is considered the primary insurance in most Provinces.
In an ideal situation, here is what happens. Your friends get involved in an accident, as the car owner, you’ll be required to file a claim with your insurer, pay the deductible, and you’re covered, but do not get shocked when your insurance rate suddenly increases.
In a scenario where the at-fault friend has an insurance coverage for another car they own, auto insurance facts dictate that their insurance providers are unlikely to cater for the bulk part of the related damages. Their insurance coverage only acts as secondary coverage. It means that your friend’s insurance providers can only cater for that part of the accident in excess of your policy limit. This normally happens when your policy is considered of high deductible.
Uncovered motorist drivers always pose a higher legal risk to the car owner in case they are involved in an accident. Car owners are held liable for all the damages, be it personal or property. For thus reasons, it is essential for car owners to make sure that they only let persons with insurance behind the wheel and they have a good driving record. Also, if you lend your car to someone on a regular basis or they live with you, you need to inform your insurance company because if you don’t, insurance may refuse the claim.
In closing, if you lend your car to some, ensure you know the kind of driver they are, how long it’s been since they’ve driven, if they have insurance, and whether anyone else will be driving the car. Best advice, if you are lending your car; make sure you contact your insurance company to find out their policy on lending your car to other drivers.