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It's important to be careful who you lend your vehicle to.
What happens with insurance when you lend your car?
If you lend your car in Ontario, you lend your insurance, according to Lee Romanov, president of an insurance rate comparison service based in Toronto. Other drivers of your vehicle can seriously affect your insurance rates. Their tickets are their problem, but their accidents are your problem.
Who can drive your car? You can lend your car to anyone who has a valid driver's licence, as long as they are not an excluded driver on your policy.
What's the risk if their driver's licence isn't valid? Very risky. Many people are driving around unaware that their licence has been suspended. You might be one of them.
Here are three examples which could cause a driver's licence suspension:
1) A missed renewal payment for your driver's licence.
2) An unpaid traffic ticket or one that missed the due date.
3) Missed child support payments. Your driver's licence can be suspended without written notice.
If you lend your car to someone whose licence is suspended, and that person has an accident, your insurance company is not liable to pay for the damages caused by the unlicensed driver.
To find out if a person has a valid driver's licence, you can call 1-900-565-6555. A fee of $2.50 is charged to your telephone bill when you use this number. You can also check up to nine licence numbers online for $2 each, payable by credit card, at the following link: Driver Licence Check http://www.rus.mto.gov.on.ca/DLCheck/Scripts/OrderForm.asp.
Can you lend your car to a driver in your household? If the driver is in your household and is listed as a driver on your policy or any other policy, this is acceptable. However, if the driver is not listed, insurance companies will add the person as a driver to your policy if he or she has an accident. All licensed drivers in the household must be listed on your policy (or shown to be listed on another policy), or be specifically excluded.
What happens if a household driver causes an accident? If you lend your car and that driver causes an accident, that accident is charged to your policy. It's as though you were driving the vehicle yourself.
With an at-fault accident, whether the car repair work is minor -- like a paint touch-up or fender bender -- or if it requires a complete body repair or realignment, your insurance rate will increase, regardless of the cost of vehicle repair.
If the driver being added is a young driver (25 or under) your rate will go up. If the driver has multiple tickets or accidents, your rate will go up. Your rate will not be affected if the driver is over 25 years old and has a clean record.
Will your insurance company try to recover the damages from the driver? No, the insurance company will not recover any claim payments from the driver, as long as the driver had a valid driver's licence and has your permission to drive. This means that an accident will only affect your insurance rate.
What if the driver gets a ticket? Any tickets are the driver's responsibility and do not affect your insurance.
What if the driver is impaired? If the driver is impaired and you knowingly let him drive your car, the insurance will not pay for damages and only limited coverage is available for injuries.
If the driver has your permission to drive and later becomes impaired and drives impaired without your knowledge, the insurance company will pay for any damages caused, but will sue the driver for the claims costs.
What if my vehicle is leased? Check your lease to be sure that drivers under a certain age are not excluded.
For more information, visit InsuranceHotline.com.