When you lend your car to another person, it is a big exercise in trust. Apart from your home, your car is probably the most expensive possession you have. So, before letting anyone in the driver’s seat, think again.
You may be under the impression that if someone wants to borrow your car, it is all a matter of how much you trust him/her. But, in reality, there is so much more to consider.
Exposure To Liabilities:
When someone borrows your vehicle, you are exposed to a lot of liabilities, even when you are not in the driver’s seat. The insurance of a car is attached to the vehicle itself and not the person driving it. So, effectively, if your friend was using your car and he/she gets involved in an accident, your motor insurance policy will cover the damages as per the terms and conditions. You will be responsible for paying the deductibles and depreciation of replaced car parts, if applicable.
But what if your friend was not at fault in the accident? In most cases, you will be able to raise a claim under the liability insurance of the third party involved in the accident. However, make sure that you are well aware of the clauses in your insurance policy so that you can make judicious decisions at a taxing time.
Listed below are some of the questions you should ask yourself when lending your vehicle to another person:
- Is he/she a good driver?
- Is he/she willing to pay in the event of an accident?
- What will the car be used for?
- Is the insurance of your vehicle up-to-date?
- How often will your friend be using the car?
- How tidy is the borrower?
This would naturally be the first thing that comes to your mind when someone requests to borrow your vehicle. It does make more sense to lend your vehicle to your friend who is a safe driver than your wife who has a poor driving history! Make sure that the driving license of the person you are lending the car to is valid as well.
This is a tricky question, because your friend would not be anticipating an accident when he/she borrows your car. However, if you are able to get a confirmation from your friend on this, there is nothing like it!
It is not unreasonable to ask your friend as to why he/she needs the vehicle. If it really is an emergency, you can consider lending it. However, if he/she intends to go shopping with it or use it for a ridesharing arrangement, then you can very well refuse. You should be aware of the fact that your car insurance policy has an exclusion that states that the vehicle will not be covered when it is used for any purpose other than its intended use.
Keeping your car insurance policy up-to-date is important at all times, more so when you are lending your vehicle to another person. Ensure that there is no break in insurance as you could lose out on some of the most attractive benefits under your policy. When insuring your vehicle, it is advisable to get a comprehensive car insurance plan as it covers you against own-damages and third-party liability.
If your friend is borrowing the vehicle for an extended period of time, find out how often he/she will be using it. The greater the number of times the car will be used, the higher are the chances of it being involved in an accident. Even a small claim under your car insurance could bring down your No Claim Bonus (NCB) significantly. So, be very careful when lending your car to another person.
Last, but not the least, ask yourself this question as you would not want to get your vehicle back with a pile of fast food containers in the back seat!
You should also keep the following things in mind when lending your car:
- In case you are regularly lending your car to another person, you can consider adding them as named drivers under your auto insurance policy. This way, he/she will also receive insurance protection when using your car. Check with your insurance company if this can be done.
- Store copies of the motor insurance documentation and registration details in the car and let the borrower know of the location of these papers. In case he/she is involved in an accident, these papers will be of immense help.
Remember, when you are lending your vehicle to someone else, you are also lending them your car insurance policy. In order to stay safe from legal obligations, ensure that you are covered on all fronts by asking yourself the above questions and taking the necessary steps.
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