Car insurance is very costly in Toronto GTA. Most people are paying between 200 to 450 CAD per month. High Auto Insurance cost was one of the burning issues during last provincial elections in Ontario.
When a friend or relative asks to borrow your car, it’s hard to say no. Before you hand over the key or you borrow the car, it is important to know the potential risk associated with lending/borrowing the car. A small mistake will result into increased insurance cost for approx 6 years for both lender and borrower.
In India, auto insurance is very cheap as compare to Ontario. In Ontario, people end up paying yearly insurance premium equal to the cost of the old car.
When you lend a car, you accept full responsibility of the driver and any repercussions due to an accident. Basically you are lending your insurance policy and your premium may increase if another driver causes an accident.
Following are brief excerpt of rules/policies
- With certain exceptions, the damages are covered by the vehicle owner’s car insurance policy first.
- If the owner’s insurance amount is not sufficient to cover all the damages. Then the difference will be covered by the borrower’s car insurance policy up to borrower’s own policy limit.
- In case of accident, car insurance owner have to bear the increased monthly auto insurance premium and if borrower’s insurance is involved in claim then borrower also need to pay more premium.
- In Most cases even if you are not guilty of accident, there will be some increase in the auto insurance.
- You can’t lend your car on a regular basis to someone without naming him or her on your insurance policy
- Traffic offences such as speeding ticket go against the actual driver
- For parking tickets, vehicle owner is on the hook.
- Traffic tickets stay on your driving record for 3 years whereas accidents on your record for six years. Which means, if there is no other accident then companies’ start giving “no accident claim” discount only after 6 years.
Points to consider before lending /borrowing the Car
- Make sure the person lending the car has Valid driver license
- Make sure they know where to find registration and insurance documents in the Car.
- Enquire about their Auto Insurance policy as well
- Make sure you are aware of driving habits of person lending the car
In the nutshell, a small mistake can be very expensive and it’s not smart to grab a vehicle that could toast your and lender’s future and credit.
Always check your insurance policy or talk to the insurer before lending your car or driving someone else’s car.