Lending your car: friendly helping hand or unjustified risk?
Lending your car to a friend or family member seems like no big deal, right? Just a friendly helping hand you willingly extend. However, you must also consider the risks involved.
By lending your car, you are also lending your insurance coverage. Any accident that your friends have with your car will go on your record.
One of our customers experienced this situation. John went on vacation and lent his car to his friend Mark. Finding out about Mark’s accident, John was unsure if he should file a claim. As it turned out, Mark was found at fault because he was making a left turn (left turning drivers are always found at fault because they don’t have right of way).
We contacted John’s insurer, but they were unable to open a claim because only the named insured can initiate claims. The insurer also informed us that the claim could be put under the driver, but that process would take time and was possible only once a claim is open.
No matter who was behind the wheel during an accident, claims will impact the named insured, most often the owner. The same applies with with parents and their kids. Therefore we highly recommend our customers have separate policies from their kids so that they’re protected from claims for which they weren’t responsible.
Once John was in the know about all of this, he got an estimate for the repairs to his car. He determined it would be best for him to repair the car without filing a claim. In this situation, the claim would require him to pay his policy deductible as well as the balance of the repair cost.
What’s more, a claim would increase his premium. It would remain on his record for six years and potentially increase his annual premium by up to $1000.
But what about accident forgiveness? Can it protect you in this case? The trick with accident forgiveness is that it always follows the driver. For accident forgiveness to be triggered, you must first file a claim (which was unworkable for John). Plus, because he wasn’t the one involved in the accident, the forgiveness would not apply to him anyway.
So what can you do to mitigate this risk? For starters, consider holding off on lending your car and driving your friends and family. Much as we want to do good for our friends and family, we must also be present to the potential impact.
Give us a call today if you’re planning to lend your car so we can help you understand the implications and all your coverage.