To Lend or Not to Lend Your Vehicle - That is the Question

Handing off a car key

Should you lend your vehicle to someone else? What are the policy implications and legal consequences of a motor vehicle accident when you lend your vehicle to someone else? Many people lend their vehicles to their family and friends without a second thought, but few contemplate the possibility of the borrower of the vehicle getting into an accident and its legal ramifications.

In Ontario, the insurance follows not the driver, but the vehicle. This means that in motor vehicle accidents involving a borrowed car, the insurance company of the owner of the at-fault vehicle is liable to pay damages. Additionally, the owner of the vehicle may need to pay a higher insurance premium following the accident. The owner of a vehicle, therefore, is legally required to exercise precaution and sound judgment in lending their vehicle to another person. The exception is if the person driving is an excluded driver under the policy. In this instance, the insurance company will refuse coverage.

According to the Insurance Act of Ontario, “The insured shall not drive or operate or permit any other person to drive or operate the automobile unless the insured or other person is authorized by law to drive or operate it.”

There may thus be serious consequences in a situation where a person lends their vehicle to someone who does not have a valid driver’s license or to someone with a suspended license. In this scenario, there is a possibility that the insurer of the owner of the vehicle refused to cover any damages resulting from the accident.

Therefore, you should definitely make sure that the person whom you are lending your vehicle to has a valid driver’s license and is not an excluded driver. You should also consider adding family members who regularly drive your car to your insurance policy.

If you or someone you know have been involved in an accident or have been denied insurance benefits, please contact JEWELL RADIMISIS JORGE LLP for a free initial consultation.
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