There may be implications if you lend your
car to someone not listed on your car insurance policy, especially if the
borrower crashes your car. Consequently, you need to be aware of all such
implications, as these might influence your decision whether or not to allow
someone else to drive your car.
According to the Australian Bureau of
Statistics as on 31 January 2017, Australia has 18.8 million registered cars on
the roads(http://www.abs.gov.au/Ausstats/abs@.nsf/0/9785EBE94AC500B8CA25753D00119ECA?OpenDocument).
That is 18.8 million cars that may possibly be lent to friends, family members
or work colleagues. However, lending your car to anyone may have implications
for you, depending on what your insurance policy states.
Understanding
the implications of lending your vehicle
If you lend your car to a friend or family
member you may not take into account the terms of your car insurance policy;
however, if you don’t, you may be taking a gamble. Some insurance companies
have strict rules about whom should be added to the list of drivers on your car
insurance. This does not mean that all insurance companies have such a rule,
however, you need to check your policy to gauge whether this is applicable to
you. There are two groups normally not covered by your insurance, namely,
excluded drivers and uninsured drivers, naturally including those who do not
have a driver’s licence.
Either way, for example, if your friend
drives your car but is not listed on your policy as a driver, a claim may
possibly be denied if this driver causes a crash. For instance, in NSW in 2016,
there were 3734 rear-end crashes in urban areas.
(http://roadsafety.transport.nsw.gov.au/statistics/interactivecrashstats/nsw.html?tabnsw=3).
You never know what will happen, and whether your friend could be involved in
an accident.
What
preventative measures can you take?
Before you lend anyone your car there are
some actions you can take to limit the risk of possible loss, not to mention
reducing a possible straining of friendship.
Firstly, your car should have compulsory
third-party insurance, which is required in Australian states. This insurance
covers drivers of your car, particularly in the case of an accident. Such
insurance does not cover the damage to your car − this is where your car
insurance comes in. However, about 2 00 000 Australians are without
comprehensive car insurance; 600 000 of these uninsured cars are on NSW roads.
(http://www.dailytelegraph.com.au/news/opinion/public-defender/more-than-two-million-cars-on-australian-roads-not-covered-by-comprehensive-insurance/news-story/dab53c068097789643436713c1d619ba).
Secondly, before you allow a friend to
drive your car, you should ask to see their product disclosure statement. This
statement will show what they are covered for.
Thirdly, you could add your friend,
partner, or family member to your insurance list. This may mean a slight
increase in premium, however, this may be weighed against a total loss after an
accident.
Lastly, the risk is yours. In the end, your
friend may pay for the damage, or even the excess; however, this is not a
given.
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