What happens if the person you lend your vehicle to gets into an accident?

By: Mike Friskney on December 16, 2025

This article has been updated from a previous version.

Key takeaways:

An insurance policy is associated with the car, not necessarily the driver, so any damages or liabilities would be the policy-holders responsibility.
If someone borrows your car and commits a traffic violation – without an accident – they will receive the fine and face the demerit points, not the policyholder. Tickets and convictions will not be reflected on your insurance rate.
If you lend out your car to the same person regularly, it’s a good idea to add them as a secondary driver on your insurance policy to make it clearer to the insurer to assign risk.
Always exercise caution when deciding who to lend your car to; the only way you can completely avoid risk is by simply not lending out your car at all.

Ever lent your vehicle to a friend or family member thinking it was just a harmless favor? Most of the time, you can expect the car returned without a scratch or incident – but each time you hand your keys over, you could be putting yourself at risk of financial and legal consequences if they get into an accident.

Your insurance is associated with your vehicle, which means that, as the insured driver, you are responsible for any claim for damages or liabilities caused by the person who borrowed your vehicle.

Not only that, but any accident involving your car will also affect your driving record and your insurance premiums, regardless of who was behind the wheel.

“Unfortunately, this is another common misconception,” says Aaron Calder, an insurance broker and CEO of Broadoak Insurance. “Any time an accident claim is processed through your insurance, the accident will appear on your driving record, which can lead to an increase in your premium.”

When your insurance will pay

In most cases, if the borrower damages your vehicle in an accident, your insurance will cover the damages. However, the extent of the coverage depends on your policy, liability, and coverage limits.

In Ontario, under the Insurance Act, it is illegal for the insured person to drive their car or let someone else drive it unless the driver has the legal authority to operate the vehicle.

This means typically, your car is insured when someone else drives your car if:

The driver has a valid license to drive in Canada and is legally allowed to drive in the province or territory.
They have your permission to drive your vehicle.
The driver is not operating your vehicle routinely.
The driver is not listed as an excluded driver in your policy.
They are not under the influence of any drugs or alcohol.

However, the borrower can take responsibility for the damage if they have something called Liability for Damage to Non-Owned Automobile Coverage (otherwise known as OPCF 27) as an add-on to their own personal insurance. It provides coverage for cars that don’t belong to the policyholder, whether it’s a borrowed car or a rented one.

What about traffic violations?

If your friend of a family member commits a traffic violation while behind the wheel of your car — say, caught texting while driving or speeding — it is their responsibility to pay any fines. They may also receive any demerit points to their licence.

However, you will not see an increase on your insurance rate from their conviction.

However, if the vehicle is involved in an accident, it involves the owner of the vehicle, not the borrower. Accident fault rules will apply, just as they would if you were the one driving.

How lending your vehicle out can cost you

As the owner of the vehicle, you’re liable for any damage or injuries caused by the driver you lent it to (unless, as mentioned earlier, they have OPCF 27).

That means if your claim is denied, you will be responsible for paying for any damages or liabilities out of your own pocket.

Across Canada, the average cost of a visit to a dealership repair shop has risen to $536 in 2025 from $465 in 2024. More complex technologies in cars and the rising price of auto parts mean that this price should continue to rise well into the future.

Here are some reasons why your insurance company may decline your claim if your friend or family member was driving your vehicle.

If they don’t have a valid driver’s licence

To legally drive in Canada, you must have a driver’s licence.

If you lend your vehicle to someone knowing they either didn’t have a valid driver’s licence or had one that was suspended, you would be violating the terms of your insurance policy.

As a result, it’s likely that your insurance company will deny your claim altogether, and as the vehicle owner, you will be responsible for covering all associated costs and liabilities incurred.

If you argue that you had no knowledge of their license’s invalidity, then it’s possible your insurance company will take that into consideration.

However, in all cases, try to exercise caution when considering who to lend your car out to.

If they use your vehicle frequently

There’s a difference between occasional borrowing and regular usage, such as driving a few times a week.

If your friend or family member uses your car often or on a semi-regular basis, they should be added to your policy and you should be paying more per month for your coverage, something known as secondary driver insurance. (They do not need to share your address in order to be added as a secondary driver).

Adding a secondary driver to your policy will increase your insurance premiums based on the type of driver they are. The cost may be influenced by factors like age, gender, history of driving and any claims, tickets or fines they have.

Nonetheless, having any regular borrowers of your car added as a secondary driver will also keep them insured, and can show a clearer picture about the level of risk tied to your policy to your insurer.

If they use your vehicle for deliveries

Your insurance policy outlines in strict detail the uses your vehicle is insured for. Commercial use is different than personal use. If someone borrowing your vehicle is using it to deliver food, packages or people, there’s a good chance your accident claim won’t go through.

Why? Because this type of usage is considered “commercial”, and personal vehicle insurance doesn’t cover commercial use.

While popular ride-share apps like Uber offers third-party coverage for their drivers, if you and/or the person borrowing your car are an independent delivery driver, you must opt for commercial insurance coverage.

The simplest way to avoid any risks associated with letting someone else use your vehicle is to be careful of who you lend it to in the first place.

“Personally, I always advise people not to lend their vehicle to anybody,” says Calder. “If you don’t lend it to anyone, there’s no chance of having any issues. If you do lend your vehicle to someone, it is your responsibility to make sure they are legally licensed. Remember, you are responsible for everything they do in your car.”

Make sure your car is only driven by those you trust — and if it becomes a regular occurrence, remember to add them as a secondary driver.