If you've ever wondered who is liable if a friend or visiting relative borrows your car and gets in an accident, you're not alone.
It can be confusing trying to work out how lending your car to someone impacts your insurance and how your car insurance policy works in a worst-case scenario.
We've taken a careful look at what is and isn’t covered when someone else is driving your car and crashes it. The bottom line is, you might want to think twice before you toss your car keys to a grateful friend or family member.
At Sheen Panel Service, we specialise in dealing with insurance companies and helping our clients get back on the road. If you or someone close to you has gotten involved in a road incident, call Sheen first.
Every policy is different
You may think you're covered for damages caused by another person driving your car because you have compulsory third party (CTP) insurance. Unfortunately, this is not the case.
While CTP insurance is indeed a legal requirement for anyone registering a vehicle in Australia, it only covers personal injury claims arising from an accident you've caused. It does not cover the cost of damages to your car or other people's vehicles or property.
That's where comprehensive car insurance comes in. It offers the highest level of cover available, including accident damage, fire and theft, and third party property damages.
Under comprehensive car insurance (and some other policies), you can claim cover for an unlisted driver, although you'll have to pay an unlisted driver excess.
If you have a housemate or family member who often borrows your car, it's worth looking at how much it will cost to list them on your policy. It may save you a lot of financial hardship in the long run.
Keep in mind that many policies don’t cover drivers under 25 or 30. However, your spouse is probably already on your policy with you, unless specifically excluded for some reason.
You're on the hook for an at-fault driver situation
Regardless of how much cover your car insurance policy offers, or who you choose to nominate as a permissive use driver, it's still you who's financially liable in an at-fault driver situation.
In the instance that a friend crashes your car, you may be left having to foot the full cost of damages yourself - or take the unpleasant route of suing your friend for the money.
It may sound overly cautious, but it's a smart idea to check someone's driver's licence as well as your car insurance policy before lending them your car. If your friend’s licence is cancelled or suspended, your insurance company will almost definitely not respond to any sort of claim for cover.
In some circumstances, your friend may even have grounds to sue you for personal injury if they were injured in the crash - for example, if they can show your car wasn't roadworthy or appropriately maintained.
It goes without saying that car accidents are stressful enough without adding the financial implications of third-party at-fault accidents into the equation.
The bottom line
At the end of the day, if you permit someone else to drive your car, you put yourself on the legal hook for whatever happens to your vehicle, your friend, and any other driver's involved, including their vehicles and property.
While there are some exceptions, it's a good rule of thumb to remember that in most cases, insurance policies will only cover you and any permissive use drivers. And even then, only to an extent.
Our advice is not to risk your car, your friendships and your finances for temporary convenience. Road incidents can be costly and frustrating, and your premiums will go up if someone else causes an accident in your vehicle.
If you find it hard to avoid having other people drive your car, get comprehensive car insurance or ensure they are listed as permissive use drivers on your policy.
Once an accident has happened, what's done is done, and in this situation, hindsight truly is 20/20.
At Sheen Panel Service, if something bad happens to your car, we'll sort you out with a replacement vehicle and expert smash repairs. We'll even liaise with your insurer on your behalf to make the experience less stressful. Call Sheen today, or Upload Your Smash to get a free panel beating quote within the hour.