Picture this: you lend your vehicle to a close friend or family member and they get into an accident. Now you’re panicking wondering whether your insurance company will cover the damage. If you’ve ever found yourself in this situation or want to prepare for the reality of the situation should it occur, you’ve come to the right place.
We answer the question “what happens if someone has an accident in your car?” below.
Whose insurance company pays if someone borrows your car and has an accident: the driver’s or the car owner’s?
One of the most frequently asked questions about another driver getting into an accident in your car is whose insurance company will be responsible for the damage, the driver’s or the vehicle owner’s. When a driver needs their vehicle to another person on an incidental basis, the vehicle’s insurance follows the vehicle.
This means that the person borrowing the car is protected by the car owner’s coverage. In essence, it’s no different than if the owner of the car got into an accident while driving. The specific details of the accident, such as who was at fault and what the damage was, determine whether the car owner’s insurance company pays or the insurance provider of the other party involved in the accident.
That said, certain provinces in Canada, such as Ontario, have no-fault insurance provisions. This means that the policyholder will deal with their own insurance company when seeking compensation for damages.
Examples of no-fault insurance coverages in Ontario and how they apply to a situation where someone else has an accident in your car are as follows:
- Accident benefits coverage: The vehicle owner’s insurance company pays for items covered under accident benefits, such as medical expenses like prescription medications and rehabilitation, for the driver and occupants of the borrowed car.
- Direct compensation-property damage coverage: Depending on the circumstances of the collision, the vehicle owner’s insurance provider pays out repair costs for the damaged car, regardless of which driver is at fault.
- Uninsured automobile coverage: If the incidental driver and the borrowed car are victims of a hit-and-run or get into an accident with an uninsured or underinsured driver, the vehicle owner’s uninsured automobile coverage will help cover the costs.
- Third party liability coverage: If the incidental driver caused the accident, they could be sued by the victim. In such an instance, the vehicle owner’s insurance company must pay the liability costs (defence costs, court fees, settlement costs, etc.). Otherwise, the other party’s insurance pays.
- Collision coverage: An optional type of coverage in Ontario, collision coverage comes into play if the accident claim does not occur through the direct compensation - property damage portion of your policy. In such an instance, the vehicle owner’s insurer pays the repair costs. These costs are subject to the coverage limits established in the vehicle owner’s auto insurance policy.
Will my insurance company cover an auto accident that happens when someone else is driving my car?
Your insurance company may cover an auto accident that happens when someone else is driving your vehicle. It ultimately depends on whether the driver was included in your insurance policy (such as a spouse or adult child) or whether you gave the driver explicit permission to drive your vehicle (known as a permissive driver).
Unless you specifically chose to exclude your partner or other members of your household from your auto insurance policy, chances are they are already included in it. Most insurance providers require all drivers under one roof to be listed on a policy.
Anyone named on your insurance benefits from the same coverage you do when behind the wheel. Thus, if your spouse or someone else on your policy is driving your car and gets into an accident, your insurance will cover it.
Further, if you give permission to someone else to drive your vehicle and they get into an accident, your auto insurance will also cover the costs. This is because car insurance follows the car, not the driver. Therefore, whether you are behind the wheel or not, your insurance policy will be the primary insurance.
So just like if you were the one driving, your third party liability coverage would protect the driver who borrowed your car if they are at fault for an accident.
The only time that a permissive driver would not be covered (or covered completely) is if the damage they caused exceeds your coverage limits. In such an instance, the permissive driver may have to contact their own insurance company, and if they don’t have their own auto insurance policy, they may have to pay for part of the damages out-of-pocket.
When will an insurance company not cover an auto accident that happens when someone else is driving your car?
If the person driving your car was not given explicit permission to do so or is not included in your current auto insurance policy, then your insurance company may not cover the accident.
A few situations in which the vehicle owner’s insurance company won’t cover the damage to your car caused by another driver are as follows:
- When you did not give the driver permission: If a friend, neighbour, or family member borrows your vehicle without your permission, then they are liable for the damage caused. That said, in such a situation, the onus is on the vehicle owner to prove the person borrowed the vehicle without permission, which can be difficult. Further, if the person who borrowed your car without your permission doesn’t have their own auto insurance policy, you may still have to file a claim with your insurance provider to be reimbursed for the cost of any damage caused.
- When the driver was excluded from your policy: Your insurance company may not pay for damage to your car by another driver if that person was specifically excluded from your car insurance policy. Excluded drivers tend to be young or high-risk drivers who you intentionally leave out of your policy, as including them would cause your premium to increase. In the event an excluded driver borrows your car and gets into a collision, your insurance company won’t cover the damage, regardless of whether you gave the excluded person permission to drive.
- When the driver is under the influence of drugs or alcohol or does not have a valid driver’s license: Most insurance companies won’t cover the damage caused to a vehicle if it was lent to someone who drivers under the influence of drugs or alcohol and gets into an accident, or who doesn’t have a valid driver’s license. Either of these offences may violate the terms of your insurance policy, and as such, the vehicle owner would be responsible for the cost of damages. If, however, you didn’t know that the driver’s license was invalid or expired, then our insurance provider might pay your claim.
- When the driver is someone who uses your vehicle frequently: There’s a big difference between lending your car to a friend or family member as a favour one time and letting them use it regularly (such as a few times each week). If the driver falls into the latter category, they should be listed as an occasional driver on your insurance policy. Should the insurance company discover that you failed to disclose how frequently this person drives your vehicle, they could deny your claim, leaving you to pay for any necessary repairs or damages.
- When the driver uses your vehicle for deliveries: If the person who borrowed and crashed your car was using it for commercial purposes, such as to deliver goods to customers, your insurance company isn’t likely to accept your claim. Personal auto insurance policies typically only cover vehicles used for personal use, not business use.
Will my auto insurance rates be higher if someone borrows my car and gets into an accident?
Yes, in most situations, your auto insurance rate will go up if an accident occurs in your vehicle, whether you were driving it or not. As mentioned above, car insurance typically follows the car, not the driver.
That said, whether or not your insurance premium will increase depends on several circumstances, including the insurance company, the coverage included with your policy, the severity of the accident, and your claims history.
For example, if your policy features accident forgiveness coverage, then your insurance company won’t be able to raise your rates after your first at-fault accident. Accident forgiveness coverage is an optional add-on that can be beneficial to policyholders that are particularly worried about accidents.
Keep in mind that some insurance companies only offer this coverage to drivers with a certain number of years of accident-free driving.
Ultimately, if the cost of your auto insurance policy goes up following an accident in your vehicle, whether it was caused by another driver or yourself, there are some ways to lower your rates again. Below is a list of money-saving tips provided by BrokerLink’s expert insurance advisors.
- Bundling your home and auto insurance
- Taking advantage of available car insurance discounts (loyalty discounts, retiree discounts, snow tire discounts, alumni discounts, etc.)
- Increasing your deductible
- Paying for car insurance annually
- Only buying the coverage you need
- Installing winter tires on your vehicle
- Maintaining a clean driving record by driving safely and responsibly
- Buying an eco-friendly car (e.g. an electric or hybrid vehicle)
- Insuring multiple cars together
- Shopping for car insurance with the help of an insurance broker
Am I liable if someone borrows my car and gets into an auto accident?
In Ontario, you will not be criminally liable for an auto accident caused by another driver under the Highway Traffic Act. However, the owner of the vehicle will likely be held liable when it comes to insurance claims. Here again, the principle of car insurance following the car, not the driver comes into play.
If the borrowing driver caused the accident, the vehicle owner’s third party liability coverage will help pay for the cost of everything from vehicle repairs to legal fees.
What to do when you get into a car accident
It’s normal to panic when you get into a car accident, whether you are the owner of the car or the one borrowing the car. No matter who is at fault for the accident or not, it’s important to follow the steps below. As car insurance experts, BrokerLink knows just what to do after a car accident.
From remaining calm and seeking medical attention to reporting the accident to the policy and contacting your insurance company, read this step-by-step guide so that you will know what to do if you ever find yourself in a car accident.
The moment the accident occurs, stop your vehicle and take a deep breath. Whether the accident is major or minor, emotions and adrenaline will likely be running high. The best thing you can do is remain calm. Assess the damage and address any imminent dangers (fires, other traffic, etc.). If anyone is injured, call 9-1-1 immediately.
Then if it is safe to do so, pull your vehicle over to the side of the road and turn your hazard lights on. Next, remove yourself from the car, but only do so if you are not injured or have minor injuries only. If you are severely injured, the best thing you can do is remain in your vehicle until emergency services arrive.
Seek medical attention
Your health and safety and the health and safety of those involved in the accident are the top priority. As soon as emergency services arrive, have yourself looked at by a medical professional. Even if you don’t believe you sustained any injuries, it’s important to get checked out. Sometimes injuries may not present themselves immediately or seem serious to you, but a medical professional may know better.
If you are taken to a nearby hospital or medical centre, make sure your doctor gives you a clear picture of the extent of your injuries. In addition, once you are discharged, follow the treatment regimen they recommend. Car accident injuries can be serious, affecting everything from the brain and neck to the spinal cord. Don’t put your health at risk by failing to follow the doctor’s recommendations.
Report the accident to the police
Once you are in a position to do so, take the time to report the accident to the police. In Canada, drivers are legally required to report a car accident to the police if the damage to their vehicle exceeds $2,000 or if someone was injured in the accident. It is best to contact the police within 24 hours of the accident.
If you are physically able and only after you have been assessed by a medical professional, gather evidence before leaving the scene. Take photos and videos of the cars involved, as well as any traffic signs or lights. It’s also a good idea to take notes on the road and weather conditions that day. Evidence-gathering is important as once tow trucks and cleanup crews arrive, all evidence will be removed. The right evidence can help, whether you are filing a claim with your own insurance provider or fighting a claim brought against you by the other party.
Exchange information with the other driver(s)
Before leaving the scene of the accident, exchange important information with the other drivers involved in the accident. All drivers should exchange their names, addresses, phone numbers, license plate numbers, driver’s license numbers, insurance company names, and insurance company numbers.
You should also write down the contact information (names and phone numbers) of any passengers or witnesses. BrokerLink’s insurance advisors generally caution against admitting fault in front of the other parties (in the event of a lawsuit) or agreeing to pay for any necessary repairs or medical expenses out-of-pocket. It’s best for everything to go through your insurance providers.
Contact your insurance company as soon as possible
The final step after getting into a car accident is contacting your insurance provider to notify them of the incident. Most insurance companies give policyholders seven days from the date of the collision to report it, though we recommend doing so as soon as possible.
Your insurance company will provide you with everything you need to file a claim. We also recommend reporting the accident to your local insurance brokerage, as a broker can provide you with key information your insurance provider may not, such as how the accident may affect your insurance rates. An insurance broker can also answer your questions about the claims process.
Contact BrokerLink for more information on what to do if someone gets into a car accident in your vehicle
To learn more about what to do if someone else gets into an accident while driving your car, contact BrokerLink. We can explain how insurance coverage works when someone borrows your car and even provide advice on how best to handle a situation in which another driver gets into an accident in your vehicle.
Generally speaking, we advise policyholders to avoid the trouble that may come with someone else having an accident in your car by not lending out your car in the first place. This way, you won’t have to stress over whether your insurance provider will cover the damage that resulted from the collision.
But in the event this unfortunate situation occurs, BrokerLink will be here to help. Our knowledgeable and friendly insurance advisors can walk you through the claims process and answer any questions you may have about how such an accident could impact your insurance rates.
Of course, if you ever decide to purchase a new auto insurance policy, don’t hesitate to get in touch. You will be assigned a dedicated insurance advisor who can help you shop around for a new car insurance policy when your existing one is up for renewal.
As auto insurance experts, we know how to find the best coverage at the lowest rates, even for drivers with car accidents on their records or a significant claims history. Comprehensive coverage at an affordable price is what we offer.
Contact BrokerLink by phone, email, or in person at any one of our locations across Canada. You can also take advantage of our free car insurance quotes by using our online quote tool today.