Lending Out You Car Or Truck-Part 1

During a family visit, your 21 year-old grandson asks to borrow your truck. You know him to be safe and conscientious and he is just to go to the local mall. You have all of the necessary insurance and you remember from conversations over the years with your insurer that occasional guests are insured while driving your car. You would have preferred he not asked but the pressure is on and you hand him the keys telling him to drive safe.

A short while later the police call. He has been in a serious crash and thankfully is uninjured. They advise you that his out-of-province license had actually been suspended. Apparently he had overlooked paying a few tickets back home. They further advise your 2-year-old car is probably a write-off. There were also injuries in the car he hit and there is a chance they will be seeking damages from you.

From an insurance perspective, this is a nightmare. First, as the truck was being operated by someone “not authorized by law”, you have just given up coverage on the vehicle i.e. no collision insurance. The cost to repair, or the entire value of the vehicle if written off, will be entirely at your expense. Further, had your grandson sustained injuries, he would not be covered under all of the accident benefit provisions.

Second. If there is a lawsuit from the injured third-parties, it is directed at the owner of the truck – you! Further, if the eventual judgment e.g. $2,000,000 exceeds the limit of your liability insurance e.g. $1,000,000, you will be responsible to pay the 2nd $1,000,000. House? Savings? Potentially gone! Higher liability limits, and the corresponding “underinsured motorist protection” would have helped and are extremely important regardless of who is driving your car! Consider $2,000,000 as a minimum these days.