It's important to note that every situation is different when lending or borrowing a car, so be sure to talk to your insurance provider if you are uncertain about your coverage.
Most of us have handed over the car keys at some point. Maybe your adult child needs to run an errand, a friend needs a vehicle for the afternoon, or a neighbour asks to borrow your car while theirs is in the shop.
In Ontario, occasionally lending your vehicle to someone is generally permitted, provided they have a valid driver’s licence, have your permission to drive the vehicle and are not specifically excluded from your insurance policy.
Insurance Bureau of Canada notes that when you lend your vehicle, you are essentially lending your auto insurance along with it.
But there are some important differences between someone borrowing your vehicle once in a while and someone driving it regularly.
Occasional Use vs. Regular Use
If a friend or family member borrows your vehicle for an occasional trip or errand, they may generally be covered under your policy, subject to its terms and conditions.
However, if someone is using your vehicle frequently, perhaps several times a week, commuting to work or school, or effectively treating it as their regular vehicle, you should speak with your insurance broker. They may need to be listed on the policy as an occasional or principal driver. Financial Services Regulatory Authority of Ontario (FSRA) specifically recognizes named occasional drivers as part of Ontario auto insurance policies.
This can be particularly important when an adult child moves back home or begins regularly using a parent's vehicle.
What Happens If They Have an Accident?
Remember: the insurance generally follows the vehicle.
If someone you permitted to drive your car causes a collision, a claim may be made against your auto insurance policy. Depending on the circumstances, that claim could affect your claims history, your premium or your eligibility for certain discounts at renewal.
Damage to your own vehicle will also depend on the coverage you purchased. Ontario requires vehicles to carry third-party liability coverage, but collision coverage for damage to your own vehicle is optional.
There are also circumstances in which an insurer may deny coverage for damage to the vehicle, including certain situations involving an impaired or unauthorized driver.
What About an Excluded Driver?
This is one situation where you should not simply hand over the keys.
In Ontario, an excluded driver is someone who has been specifically removed from coverage under your auto insurance policy through an OPCF 28A Excluded Driver Endorsement. This is often a household member or higher-risk driver. If that person drives your vehicle, they are not covered under your policy for losses arising from their use of the vehicle.
Ontario's Insurance Act limits the insurer's liability for losses occurring while an excluded driver is operating the vehicle, subject to certain statutory exceptions.
Before You Lend Your Car
Before allowing someone else to drive, ask yourself:
- Do they have a valid driver's licence?
- Do they have my permission?
- Are they excluded from my policy?
- Are they truly borrowing the vehicle occasionally, or has their use become regular?
- Am I comfortable having a potential claim made against my insurance if something happens?
FSRA also advises that proof of insurance must remain with the vehicle when someone else is driving it with your consent.
Sharing your car occasionally may seem simple, but insurance becomes more complicated when occasional borrowing turns into regular use.
If you're not sure whether a family member, friend or other driver should be listed on your policy, contact Gibb Insurance Brokers. A quick conversation before handing over the keys can help make sure everyone understands the coverage.