Insurance dilemma: Should you really let your mate borrow your car?

People smiling and driving in a car when a friend has borrowed the vehicle.

We have all been there. Your mate, Dave, has his car in for service and just needs to get to work . Letting him borrow your car seems pretty harmless, but in truth, Dave being behind the wheel of your ride could increase your car insurance costs if something were to go wrong.

Let's find out why, and the steps to take before lending your car to a mate.

1. Ask about driving history before loaning out your car

Ask yourself, is Dave really trustworthy? Accidents can happen at any moment and even the most seasoned drivers make mistakes on the road, but if Dave’s car is at the panel beaters as a result of his own doing, is he really the right person to be taking your beloved Mazda out for a spin?

So, Dave’s actually pretty responsible? That’s great! But just know if he has an accident you could be up for a few extra costs regardless of his driving skills. This could include additional excesses for unlisted drivers (if he's not listed on your policy), young drivers (if Dave is under 25) or both. Plus, you could see  increased future premiums if Dave does take a spill, and potentially also lose your hard-earned no claims bonus.

2. Check your policy for additional excesses

If you're not sure who's covered under you policy, it's time to check your policy documents for a list of nominated drivers and your product disclosure statement (PDS) for any driver exclusions. If Dave is someone you live with, he could already be listed on your policy.

It is also worth checking out the excess levels that you could be liable for if he ends up having an accident. You could be looking at anywhere from a few hundred dollars to thousands for individual or combined unlisted and young driver additional excesses.

3. Consider how often this person drives your car 

While you may not deem it worthwhile to adjust your policy for an isolated trip, you might consider it necessary to add your best mate or significant other to your policy, especially if they’re already using your car often.

Planning a road trip with friends and expecting to share around the driving duties? This is another instance where adding drivers to your policy could save you in the long run.

4. Contact your insurance provider

Circumstances are always changing, so most insurance companies are pretty reasonable when it comes to adding more drivers to your car insurance policy. Be aware this will cause a bump-up in your premium depending on the demographics, experience and driving history of the person you're listing. But on the up-side, it will can help you avoid the additional excesses discussed above.

What happens if there is an accident when your friend is driving?

If you’ve just safely stepped off the bus in front of the office and you get a call from Dave saying he's been involved in an accident in your vehicle, you might begin to lose your cool.

Car insurance claims can get messy enough without the added complexity of a different driver. To make things a little clearer, we’re going to hit you with the good, the bad and the ugly news of your current situation.

The good news

The good news is that as long as you’ve completed the steps above and Dave has a valid driver’s licence, you’re still covered. In saying this, you will still have to pay the excess you have agreed with your provider to unlock your policy and make a claim, but at least you won’t be hit with an additional unlisted driver excess.

The bad news

In this scenario, Dave doesn’t live with you and you didn’t have him listed as a nominated driver. While some providers like NRMA (in some states) cover you for anyone who drives your car, filing a claim with a driver who isn’t listed on your policy is likely to result in an unlisted or 'unnamed' driver excess.

But it could be worse. If Dave is under the age of 25, you can expect to be forking out even more cash for a young driver excess, even with insurance providers who cover anyone who drives your car. These figures can climb into the thousands – so be extremely careful when lending your car to a young person.

The ugly news

Like many claims in the world of insurance, this one could seriously affect your future policies. While no claims bonuses are designed to reward safe drivers, you can expect yours to take a plunge even if you weren’t responsible for the accident. Some car insurance companies offer no claims bonus protection as an optional extra (at an additional cost to your premium). This maybe be something you want to look into if you’ve accrued quite the discount.

You can also expect an expensive surprise when it comes to renewing your car insurance premium. Even though you weren’t personally responsible for the accident, your car insurance provider is probably going to deem your policy a bigger risk for them to renew, and as a result will up your premium.

If you're not happy with your current policy, see if you can find a better deal to meet your needs and budget using Mozo's car insurance comparison table.

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