While I was away on a holiday in Turkey, a friend borrowed my car and was involved in an accident. She was looking after my cats and I had asked her to start the car occasionally so the battery wouldn't run down. She was given a ticket for careless driving. There were three cars involved altogether. The police report does not state whether the other cars were damaged. I'm reluctant to make a claim with my insurance company because it will increase my insurance rates drastically. My plan is to get the car repaired on my own and have her pay for the cost. Is there a possibility that her insurance company would pay the claim? – Judy, Toronto
Unless your friend bought special coverage before taking your car on a joyride, her insurance company won't pay for your repairs, says the Insurance Bureau of Canada.
In Ontario, if she'd bought OPCF 27, her insurance policy would cover damage to a borrowed or rented vehicle. But, for it to work, you'd need a written contract saying you were lending your car to her.
"Normally, you get this if you rent a lot of vehicles – but the agreement has to be in writing," says IBC Ontario spokesman Pete Karageorgos. "Otherwise, anyone who borrows your vehicle, borrows your insurance policy."
Report it, or not?
Normally, your insurance coverage automatically extends to anyone who borrows your vehicle. If they get in an accident, it's your insurance – not theirs – that covers any damage. It's good news because it means your insurance company, and not you, is on the hook if your friend borrows your car and hits something – or someone.
But if you don't report the accident to your insurance company, you might lose that coverage, Karageorgos says.
"It would be a good idea to report it," he says. "If you don't, you'd be breaking your insurance policy and they'd have grounds for not covering you if somebody decides to sue you down the road."
Section 1.4.4 of the Ontario Automobile Policy says you must tell your insurance company within seven days of an accident if you're making a claim – or if the accident has to be reported to police under the Highway Traffic Act (HTA).
The HTA says accidents have to be reported to police if damage to all vehicles and property is over $1,000, if there's personal injury, if it's a hit-and-run or if there's suspicion that any of the drivers is impaired by drugs or alcohol.
"If somebody's claiming personal injury they have two years to make a claim – they could sue the driver, or you, or both of you," he says. "If you've reported it, your insurance company will protect you."
If your friend gave your insurance information to the other drivers and they're making claims, they'll pass on that information to their insurance companies.
"It's likely that your insurance company will find out about it even if you don't report it," Karageorgos says.
Will your rates go up?
In Ontario, if you're found less than 25 per cent at fault in an accident, your rates will not increase. If the fault is any higher, they'll go up – even if there was no damage. And there's no formula for how high they'll go, Karageorgos says.
"Your insurance company might have a policy where they'll forgive the first at-fault accident," he says.
One potential way to avoid a massive rate hike? Tell your insurance company that your friend stole your car, Karageorgos says. You'd still see a rate increase because you're reporting a theft, but it wouldn't be as high – and the insurance company would pay for the damages. Then, the company would go after your (former) friend for the money.
"You'd have to report your friend to the police," he says. "I once had a case where a teenager crashed the car into the garage door and his parents had him charged with car theft – the insurance company went after him for the damages."
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