Lending your car might seem harmless, but what happens if the person borrowing it gets into an accident? This guide explains how insurance works in such scenarios and how to prepare for potential risks.
Is the Damage Covered? WA vs. All Risk
Whether the damage is covered depends on your car insurance:
- Liability Insurance (WA): Covers only the damage caused to other vehicles or property. Damage to your own car is not covered.
- Comprehensive (All Risk): Covers damage to both others and your own car, regardless of who’s driving.
In any case, your insurance is responsible for claims, not the borrower’s.
Set Clear Expectations Before Lending Your Car
Lending your car comes with risks, so here are some tips:
- Discuss Costs in Advance: If your insurance covers the damage, you might lose your no-claim discount, face higher premiums, and pay a deductible. Decide who will cover these costs.
- Verify the Driver: Ensure the borrower has a valid driver’s license and isn’t under the influence of alcohol or drugs.
Note: A personal liability insurance policy (AVP) does not cover motor vehicle-related damages.
What If the Car Was Borrowed Without Permission?
If someone borrows your car without consent and causes damage, they are typically held responsible. If they refuse to pay, you might need to file a police report to recover costs.
Avoid Surprises with Good Communication
Lending your car requires trust, but it’s wise to put financial responsibilities in writing beforehand. Accidents happen quickly, and being prepared can save you from unexpected stress and expenses.
By following these tips, you can minimize risks and confidently lend your car when needed.