If you are considering lending your vehicle to somebody, whether a friend or family member, you should be aware of potential legal liability to you or your insurance company if that person gets into an accident.
Statutory Accident Benefits (SABs) are provided for in every automobile insurance policy in Ontario. Any person injured in an automobile accident, regardless of fault, may claim these benefits – including drivers, passengers, pedestrians, or cyclists. Ontario’s Insurance Act prioritizes whose insurance company is liable for payment of these benefits in the event of an accident. The default rule for occupants or non-occupants of the vehicle is that the injured person’s own insurance company pays (regardless of whether their vehicle was involved in the accident). However, if an individual does not have their own insurance, they will access benefits through the vehicle that was involved in the accident. This means if you lend your car to a friend and they hit a pedestrian without car insurance, your insurer may end up paying the pedestrians benefits. This it may result in increased insurance premiums to you.
An injured person may also sue a motor vehicle owner for damages above and beyond that compensated for through no-fault SABs. If a person borrows a vehicle with the owner’s consent, under Ontario’s Highway Traffic Act, the owner is vicariously liable for losses or damages suffered by any person by reason of the driver’s negligence. This means that an injured person may bring a claim against the driver who borrowed your car, but also against you as the ownee of the vehicle. As insurance follows the vehicle and not the driver, it is your insurance company that will respond the claim. Furthermore, if the damages claimed exceed the limits of your policy, there is chance you could be held personally liable for the excess amounts.
You should also be aware there are circumstances where your insurer may take the position they are not responsible for coverage. For example, if the person borrowing your car is not properly licensed and there is evidence you were aware of this fact, you may find yourself without insurance coverage and exposed to significant personal liability.
To minimize your likelihood of liability, before you lend your car, it is vital that you ensure the person borrowing it is a responsible driver, properly licensed to drive, and not under the influence of drugs or alcohol. If you are lending your car to someone on a frequent basis, that person should also be specifically named on your policy. Be aware however that should an accident happen and the person driving your car is at fault, it is your insurance that will respond and you will be a properly named defendant in any action.
For more information, contact Caroline Failes at 613.566.2849 or [email protected]
