A common question newcomers to auto insurance have concerns how a car policy functions. Does insurance cover the car or the driver? It’s a reasonable question, since motorists frequently drive other vehicles or lend their cars to other drivers. Usually, a policy issues to a specific vehicle, identified by its unique Vehicle Identification number, or VIN. There are cases where insurance coverage extends to the driver when they use other vehicles.
Does Automobile Insurance Follow the Car or the Driver?
A basic auto insurance policy issued in Ontario lists both the car by VIN number and the policyholder by name. That basic insurance, however, issues to the car. The province requires certain statutory insurance coverage for any vehicle using public roads. That coverage always follows the car.
The insurance market in Ontario permits much flexibility for insurance companies, as well as a variety of options for the consumer. Since some motorists prefer special coverage that suits their driving needs, certain add-ons extend the terms of the basic policy.
Several coverage options modify the policy so that the policyholder carries the terms of their own coverage when driving other vehicles. Usually called non-owned vehicle coverage, many call it “car rental coverage,” since it extends the terms of the policy to rental vehicles. The terms also extend to vehicles that the policyholder borrows.
Is it illegal to drive a car in someone else’s name?
While it depends on the circumstances, in most cases it’s fine to drive a car licensed and insured to another person — as long as you have their permission and they know you’re driving the vehicle. Incidental use of a vehicle protects other drivers. This is a case where insurance follows the car.
Using another person’s car regularly changes the situation somewhat. Even though with the other person’s knowledge and consent, once regular use begins, the insurance company must be informed. An example of the difference between regular use and incidental use may arise with friends borrowing a car to shop for groceries. If friend “A” borrows the car once every few months on an irregular basis, when their spouse is late at work, the car’s use is incidental. Friend “B,” on the other hand, borrows the car each week. They shop on Thursday nights at 5 p.m. This becomes regular use and the policy should carry the name and driver’s license information of the regular driver. It’s up to the insurance company to determine whether this driver affects the policy’s premium.
Can someone drive my car and be covered on my insurance?
Yes. Both those who drive the car regularly or who borrow it occasionally can be protected by the insurance coverage in place on your vehicle. There are, however, various prerequisites for coverage.
As noted above, a driver using another’s car on an incidental basis remains protected under the car’s insurance policy with no further action. Those who borrow the car on a regular basis and those who have access to the vehicle can rate coverage under a car’s policy. However, their personal information and driving history must be listed on the policy.
This could include a spouse or other family members residing with the insurance holder. Insurability is not limited to that, since there’s no requirement for a relationship. In fact, there’s no need for a named driver — a car user whose name appears on a policy — to reside at a common address.
There’s one hitch, however. The insurer could charge extra for some or all of the named drivers. If there’s a perception of increased risk of claim due to other drivers, premiums could go up. It depends on the person, their driving record and the company’s evaluation of risk.
Can I drive someone else’s car without insurance?
It depends on the interpretation of “without insurance.” If you mean someone else’s car that’s not insured then no, absolutely not. In Ontario, driving without insurance may cost both the owner of the car and the driver up to $50,000 in fines, license suspensions and vehicle impoundment.
However, if you mean that, as a driver you don’t have insurance, but you wish to drive a car insured to someone else, then yes, you can. Incidental drivers can borrow vehicles and the insurance extends to cover them. Motorists who drive another person’s car on a regular basis likely need addition to the insurance policy of the car. When there’s doubt, policyholders should check the circumstances with their insurer.
There is one principle that may interfere with car lending situations. If the borrowing driver has a poor driving record or insurance claims history, an insurer may exclude them from driving a vehicle, if that person fails the company’s insurability requirement. A policyholder has an obligation to assure responsible use. If they know a driver is high risk, they should probably not lone their car. If the insurer proves that such risks were known, they could potentially hold back claims.
Do you have to be 25 to drive someone else’s car?
Provided the young driver has reasonably clean driving record, no, there’s no age restriction. This applies to both incidental and occasional use. The policyholder has the obligation to report regular, occasional drivers to the insurer. In the case of an inexperienced driver, additional premiums covering that driver’s access to the car are likely. Since young drivers are statistically more likely to have accidents, their access to a vehicle increases its chances of incident. Unlike some provinces, Ontario permits the use of age as a risk determination factor.
There are compelling reasons, though, why a young driver should be listed on another person’s policy. There is no age 25 magic number effect. Lower car insurance rates have more to do with a driver’s experience and driving history. These factors commonly come together for many drivers around the age of 25. Rates decrease with every year of trouble-free driving. Adding a child to a parent’s policy begins the insurance history of the young driver. This provides a record of insurance coverage. If this record remains claims-free, then the driver has a better chance of achieving the lowest premiums at the youngest age.