Insurance dilemma: should you really let your mate borrow your car?
We have all been there. Your mate, Dave, has his car in for service and just needs to get to work. You, being the environmentally friendly-friend catch the bus to work most mornings, so having him borrow your car seems pretty harmless. But in truth, Dave being behind the wheel of your sweet ride could potentially cost you quite a bit of cash in car insurance payments if something were to go wrong.
Before loaning 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 out for a spin?
Dave’s actually pretty responsible? That’s great! But just know that if he has an accident you could be up for a few extra costs in the form of an unnamed or young driver excess, increased future premiums and potentially, a loss of your hard-earned no claims bonus.
You should also:
Check your policy -
For a list of nominated drivers. If Dave is someone you live with, he could already be listed on your policy. It is also worth checking out the excesses that you could be liable for if he isn’t, and ends up having an accident.
Consider how frequently this person could be driving 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.
Contact your insurance provider -
Circumstances are always changing, so most insurers are pretty reasonable when it comes to adding more drivers to your car insurance policy. Be aware that this will cause a bump in your premium, depending on the experience of the driver, but could see you avoid the additional excesses discussed above.
What happens if there is accident?
If you’ve just safely stepped off the bus in front of the office and you get a call from Dave saying he has made a mistake and has 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, just as long as you’ve completed the steps in the Before loaning your car section of this guide and Dave has a valid driver’s licence, you’re almost certainly 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 any additional excess.
The bad news
Dave doesn’t live with you and you didn’t have him listed as a nominated driver. Uh oh, here is where things get tricky. While some insurers like NRMA 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 a nasty, not-so-little “unnamed driver excess” which could cost you up to $850. After being hit with an unnamed driver excess, you might think it can’t get any worse. Well, it can. If Dave is under the age of 25, you can expect to be forking out even more cash in the form of additional excesses for young drivers, even with insurers who cover anyone who drives your car. These figures can reach as much as $1600 - 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 or NCBs are designed to reward safe drivers, you can expect yours to take a plunge even if you weren’t responsible for the accident. In saying that, some insurers offer you NCB protection at an additional cost which is something you may want to look into if you’ve accrued quite the discount. Not only might you lose your NCB but you can 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.
To find out what you need to do to make a claim, head to our guide on car insurance claims or to find out whether you can save by switching to car insurance policy check out our car insurance comparison tables.