There are many types of common car accidents, and you never know when one might occur. That’s why we have car insurance. But what if you lend your car to a friend or family member, and they end up in an accident? Will your insurance cover the damage? If you’ve ever been in this situation or want to be ready just in case, you’re in the right place. We answer the question, “What happens if someone has an accident in your car?” below.
Does car insurance follow the vehicle or the driver?
Vehicle insurance typically follows the vehicle, not the driver. So, if you let someone borrow your car, your insurance usually covers them, just like it would if you were the one driving.
However, whether your insurance pays out depends on details like who was at fault and the extent of the damage. In some places, like Ontario, there are no-fault insurance rules, meaning that each driver’s insurance handles their own claims, regardless of who caused the accident.
Most auto insurance policies include some variation of the following coverages. Here’s 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 bills like prescription medications and rehabilitation, for the driver and occupants of the borrowed car.
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 third-party liability costs (defence costs, court fees, settlement costs, etc.). Otherwise, the other party’s insurance pays.
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.
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 (DCPD) 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 car insurance policy.
Will my insurance cover an accident that happens when someone else is driving my car?
Your own insurance company will likely cover an accident that happens when someone else is driving your car, but it does depend on a few factors. If the driver is already listed on your insurance policy—like a spouse or an adult child—or if you gave them permission to drive your car, they’re generally covered.
Most insurance companies require everyone in your household who drives to be included in your policy. So, if your spouse or anyone else listed on your policy has an accident while driving your car, your insurance will likely take care of it.
Even if someone isn’t listed on your policy but you gave them permission to drive, your insurance usually covers any accidents they might have. This is because car insurance coverage typically follows the car, not the driver. So, if someone you allowed to drive your car is at fault in an accident, your insurance will likely handle the costs.
What if the person driving my car has their own car insurance policy?
If someone driving your car has their own auto insurance, their coverage might kick in as secondary coverage. As we mentioned before, insurance follows the vehicle and not the driver, so your car insurance is still considered the primary coverage since the accident happened in your car.
So, if someone else is driving your car and causes an accident, your insurance is the one that will handle the damages first since it’s your vehicle. However, if the costs of the accident exceed your policy’s coverage limits, then the other driver’s insurance company might step in to cover the remaining costs.
When will my insurance refuse to cover someone else driving my 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:
If you did not give 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.
If they were 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.
If they drive under the influence or do not have a valid driver’s licence
Most insurance companies won’t cover the damage caused to a vehicle if it was lent to someone who drives under the influence of drugs or alcohol and gets into an accident or who doesn’t have a valid driver’s licence. 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 licence was invalid or expired, then your insurance provider might pay your claim.
If they use 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.
If they use 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 cases, your auto insurance rates will go up if there’s an accident in your car, whether you were the one driving or not. If the person who borrowed your car is found to be at fault, that accident goes on your insurance record, which could lead to higher insurance premiums. This is because, as we’ve mentioned, car insurance typically follows the car, not the driver.
However, whether your rates increase depends on a few factors, such as your insurance company, the details of your policy, the severity of the accident, and your claims history.
For instance, if your policy includes accident forgiveness, your insurance company won’t raise your rates after your first at-fault accident. Accident forgiveness is an optional feature that can be helpful if you’re particularly concerned about potential rate hikes after an accident. Just keep in mind that some insurance companies only offer accident forgiveness to drivers who have maintained a certain number of years with a clean driving record.
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 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.
Read this step-by-step guide to learn what to do if you ever find yourself in a car accident, from remaining calm and seeking medical attention to reporting the accident to the company and contacting your insurance company:
Remain calm
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.). Then, if it is safe to do so, pull your vehicle over to the side of the road and turn your hazard lights on. If anyone is injured, call 9-1-1 immediately.
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.
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 Ontario, 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.
Gather evidence
Next, 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, important information should be exchanged with the other drivers involved in the accident. All drivers should exchange their names, addresses, phone numbers, licence plate numbers, driver’s licence 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 and even offer advice on whether you need to contact your insurance company after a minor car accident.
Contact BrokerLink today
Here at 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 and walk you through what documents you need for car insurance. 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. We offer comprehensive coverage at an affordable price.
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.
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