I've heard that if someone borrows your car and has an accident and they are found at-fault, you might be able to transfer the fallout to their insurance company so that it's not on your record. Could this be done? – Mallory in Sudbury, Ont.
At one time or another, we've all loaned out possessions and had them unintentionally damaged by the borrower. With camping gear, garden tools or books, rectifying the situation is relatively easy. However, when it comes to an automobile, the consequences of an accident may be felt long after your vehicle is repaired – even if you weren't behind the wheel.
Insurance typically follows the vehicle. When you lend your car to another driver, you're also lending the insurance that goes with it, and the good driving record you've established with that car.
"If I borrow your car and get in a collision where I am at-fault and that causes damage to your vehicle, my driving record will represent that. So any collisions, any tickets as the driver are going to appear on my licence, my driving record," says Pete Karageorgos, manager of consumer and industry relations, Ontario, at the Insurance Bureau of Canada.
"The payment to repair your car through insurance will be paid out by the company that insures your vehicle, so that means there will be an at-fault collision on your insurance record.
"Now, the one bright light or potential piece of good news is that there might be the opportunity – if I've borrowed your car and I also have car insurance – we might be able to get my insurance company to take the hit," says Karageorgos.
The insurance companies I contacted were reluctant to discuss the practice, but there have been instances when claims were transferred from the policy of the vehicle owner to the policy of the individual who was behind the wheel at the time of the accident.
"Some companies may be willing to do that. It has been done in the past, but where it's easier, or has been most successful, is when we're both insured with the same company, so that the insurance company is willing to assign that payout to my policy rather than yours. So the payout would be recorded under the other party's policy instead," says Karageorgos.
"So that could be a hopeful point for someone to raise; it is possible, but it would take some work and the company would have to be willing to do it. Does it occur regularly? I don't think so, but it's an argument someone in that situation should be making – especially if they want to keep their friend."
If you find yourself in such a scenario, it's worth pursuing the possibility of transferring the claim. Whether your insurance company's procedure is aligned with this practice may be another story.
"It's not completely unheard of, but the person who borrowed the vehicle must have their own insurance policy, otherwise there is really nowhere to assign that responsibility, that blame to," says Karageorgos.
Before lending out your vehicle, along with your insurance record, contact your broker to establish whether it's even possible to transfer a claim should such an incident occur.
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