We want to allow our granddaughter to borrow our car. She’s 18 and has an Ontario G2 licence and 18 months of clean driving. She lives in the same city but not with us. Can she borrow it a couple of days each week without us having to add her to our insurance policy and pay for occasional driver coverage? – Winnie
If someone is borrowing your car regularly, you should let your insurance company know, insurance experts said.
Depending on the borrower’s driving record or whether they have insurance somewhere else, you might not have to pay extra.
“There’s a difference between disclosing a driver and actually having to list them [on your policy as an occasional driver],” said Alex Gemmiti, a service team manager with Whitby, Ont.-based Mitchell & Whale Insurance Brokers Ltd., which operates as Mitch Insurance. “It’s always best to tell your insurance company. … There’s an obligation to disclose anybody who may be [regularly] using your vehicle.”
In Ontario and other provinces without government-run insurance, when someone borrows your car, they borrow your insurance.
So, if they are in a crash and they’re at fault, the claim goes on your insurance record – and your rates could go up for the next six years. It’s the same as if you had caused the crash.
That’s provided they have a valid driver’s licence – if they don’t, the damage might not be covered at all.
As far as your insurance company is concerned, there’s a difference between someone borrowing your vehicle occasionally – perhaps borrowing your pickup truck once or twice a year to haul some plywood – and doing it regularly.
If someone is driving your car often, your insurance company wants to know about it, said Anne Marie Thomas, director of consumer and industry relations for the Insurance Bureau of Canada.
“The key is regular and frequent. If the driver is a recurring user of the vehicle on a frequent basis, they would be considered an occasional driver,” Thomas said in an e-mail. “There may be a charge for the additional exposure of having her use your vehicle.”
So exactly how often is frequent? That’s up to your insurance company.
“That would be an underwriting decision,” Thomas said. “But to give you a bit of an example, if someone drives the vehicle every Tuesday, they would be [considered] a regular operator.”
Weighing the risks
Why does your insurance company want to know? In case that driver is riskier than you are, Gemmiti said.
“An insurance company builds your rate based on whoever has the worst driving record,” Gemmiti said. “If you’re adding somebody who has a less desirable driving record for that insurance company [than you do], then they may charge a premium.”
The bottom line is to tell your insurance company who’s driving your vehicle and how often. They may note it but not require you to add them to your policy or pay extra, Gemmiti said.
For example, if the regular borrower has insurance somewhere else – if they have their own policy or are an occasional driver on someone else’s policy – your insurance company may not charge you extra, he said.
If you do have to pay extra, how much more could it be? Insurance experts we spoke to said it’s tough to say, but it could bump up your rate by anywhere from $500 to $1,000 a year – or more, depending on the borrower.
If you don’t tell your insurance company that somebody’s regularly driving your car, you could get caught if they get in a crash, Gemmiti said.
“If it’s an undisclosed driver that’s involved in the accident, then the insurance company will want to know who that driver is, the status of their driver’s licence and how often they’re using the vehicle,” he said.
That investigation could slow down your insurance claim. So it could take longer to get repairs or a payout.
Worse, if the company decides you didn’t tell them about the frequent borrower because you didn’t want to pay extra, they could potentially not cover the claim – and could even cancel your policy, he said.
“Hiding a driver intentionally is insurance fraud. It’s very different from just not realizing you needed to let your insurance company know,” Gemmiti said. “If the insurance company cancels your policy, that goes on to your insurance record and can affect future rates and eligibility.”
The rules around borrowing vehicles work differently in the three provinces with government-run auto insurance.
Generally, if someone borrows your car and crashes it in British Columbia, Saskatchewan and Manitoba, their at-fault crash would go on their insurance record, and not on yours. So your rates wouldn’t go up – but theirs would.
In B.C., regular borrowers should be listed on your policy, said the Insurance Corporation of British Columbia.
If someone is driving your car regularly, they usually don’t have to be added to your policy in Manitoba – although they have to follow the requirements of your policy (for instance, they can’t use your car as an Uber if your policy doesn’t allow that), said Manitoba Public Insurance.
In Saskatchewan, you don’t have to list borrowers for basic public insurance, although if you have additional coverage through a private company, you may have to add anyone who drives your car more than half of the time, said Saskatchewan Government Insurance.
Have a driving question? Send it to globedrive@globeandmail.com and put ‘Driving Concerns’ in your subject line. Emails without the correct subject line may not be answered. Canada’s a big place, so let us know where you are so we can find the answer for your city and province.