Ask LH: What Are The Risks In Driving Someone Else’s Car?

Ask LH: What Are The Risks In Driving Someone Else’s Car?

Dear Lifehacker, I’ve always been worried about driving cars that belong to other people, especially if I think they may not have a third party insurance policy. What would happen if I was found to be at fault? Would I be liable for the full costs involved, or would they be shared with the owner of the borrowed car? If the risk is too great, should I say no when a friend asks me to drive them home? Thanks, Third Party

Car accident picture from Shutterstock

Dear TP,

This is a difficult question to answer without having any particulars to work with. Does the car owner have comprehensive car insurance? Have they made any previous claims? Did they opt to pay a lower yearly insurance charge for higher excess fees? How old are you and how long have you held a full licence? These are just some of the factors that can affect what happens in the event of an accident while you’re driving a friend’s car.

If your friend’s car is registered it will have Compulsory third party insurance (CTP) by default. This covers your legal liability for accidents in which you caused injury or death. This is a legal requirement for all states in Australia and is usually covered in your registration fees (the exception is NSW and Queensland, where drivers have the option of choosing a CTP provider.)

However, CTP does not insure you for damage caused to vehicles or property, which is where your friends’ car insurance comes in.

It’s highly unlikely that any of your mates listed you as a driver when applying for their car insurance — but that doesn’t necessarily mean you won’t be covered. NRMA Insurance, for example, extends to anyone who drives the car.

Even if your friends’ insurance policy does cover additional drivers, there could still be hefty excess fees involved, especially if you’re under 25 years of age. Some insurance policies don’t even cover drivers under 30. The excess fees can add up to a few thousand dollars even when third-party property damage is covered.

If you have a friend who regularly asks you to drive their vehicle, it might be worth asking for a copy of their Product Disclosure Statement (PDS): that way you can see exactly what’s covered and decide whether the risks are worth taking.

That said, if the accident is minor and only involves property damage, it will generally be the car’s owner who gets stuck with the deductible. Whether you choose to be a good mate and reimburse him/her is largely up to you.

If any of our readers have their own tips or anecdotes to share, let TP know in the comments section below.

Cheers Lifehacker

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  • If you as the driver aren’t covered by any insurance (other than CTP), then you’re liable – 100%. The other party’s insurance company will chase you and extract every last dollar from you. It can send you into financial ruin.

    Don’t ever drive someone else’s car if you’re not covered by their insurance, plain and simple. Hell, you could even take out your own policy for you driving their car if they don’t have any.

    That goes both ways, of course, don’t ever let anyone drive your car if they won’t be covered by your insurance. It’s simply not worth the pain and suffering that would result if an accident occurs.

  • Isn’t it fairly standard for comprehensive insurance to cover a non-listed driver but at a much higher excess?

    I honestly don’t know, this year is the first time I’ve ever owned and insured a vehicle.

    • Depends on your definition of “fairly standard”. Common perhaps, but it’s certainly not the case across the board.

    • I make sure that whatever policy I go with at the very least covers unlisted drivers (for a heavy excess) but then if something happens its only a few thousand dollars rather than the alternative.

  • The article or the comments don’t really clear anything up.
    The policy is tied to the car right? But the car and policy are taken out by an individual. But if I was in someone else’s car and had an accident, I would swap MY details with the other driver but would be bound by the car owner’s policy? So if there policy doesn’t cover me for whatever reason, then does the other person’s insurance company chase me, or the policy owner?
    If it’s me then isn’t it the same as if I was driving an uninsured car (other than CTP)?

  • There’s a little bit of information that is wrong, and missing from this response.
    I’ve worked in insurance motor claims, in both recoveries (where we chase the responsible person) and settlements (where we pay for the damages) for just over 10 years, and have appeared in court on a regular basis presenting evidence of claims before magistrates.
    Firstly, driving someone else’s vehicle is ALWAYS a risk. It is my suggestion that you only drive the vehicle of someone who is a very close friend. I have seen situations where someone has an insurance policy, which would cover the friend driving, where the policy holder has refused to lodge a claim against their policy, meaning the driver is responsible for every cent of the “Not at Fault” vehicle.
    If you want to drive someone else’s car, make sure that they don’t have a specified person policy, and that there aren’t any additional excesses which might apply due to being unlisted, or due to your age, or experience of driving (usually insurers have an “Inexperienced Driver” Excess for drivers over 25 years, with less than 2 years driving experience).
    The most important thing to know is that unless you are driving for your employer, that if found “At Fault” for an accident that you are personally responsible, the owner of the car is absolutely NOT responsible. If there is no insurance, or if your friend refuses to lodge a claim, then the “Not At Fault” party/ies can pursue you personally, including taking court action if you don’t pay which can then affect your credit rating if a judgment is recorded.
    ALSO… Read your own insurers PDS (Product Disclosure Statement) and Policy Wording (These are sometimes different things)… Make sure you know what you are covered for. I see too many claims declined over silly things, because people don’t know about the specific conditions in their insurance.. And usually really easy things to comply with.. It’s not there to trick you, its there to protect the insurers risk, and like anything, if you don’t like the condition, find an insurer who don’t have that specific condition.
    There’s an old saying in insurance, that you wouldn’t buy a pair of jeans that doesn’t fit you, so why would you buy an insurance cover that doesn’t protect you?
    Anyway.. I think my advice is over.. If there’s anything else you want to know, ask away.

    • ALSO… Read your own insurers PDS (Product Disclosure Statement) and Policy Wording (These are sometimes different things)… Make sure you know what you are covered for. It’s always worth reading your policy. My partner had someone hit her last year and refuse to put in a claim, and her third party fire and theft insurer claimed she was up shit creek and would have to take the other party to court personally. Reading the policy however she was covered up to 5k if not at fault and the other driver was uninsured. We called back, they didn’t even know about this, had to get a supervisor who then had to bring up the policy and check the line/paragraph we gave them.

      Don’t trust your insurers word, they don’t want to pay you anything. Make sure you double check the policy.

  • Don’t drive someone elses car unless you can afford to fix it / pay their excess. If they don’t have third party fire theft or full comp, don’t drive it. It’s not worth it, an accident will cost you a bomb, and possibly lose you a friend.

    I’ve had one accident in a friends car, we were out doing crap, he was really tired, so got me to drop him home and take his car back to give back to him the next day. A roo jumped out in front of me, I swerved, and then it jumped into the front 1/4 of the car as I was going past it.

    He had no insurance, but this happened Friday night, and he was meant to be selling it Monday afternoon. I jumped online, found the same model of car being wrecked, bought the parts, and called a panel beater to have the parts sprayed and fitted, as well as buying a couple of extra bits to improve the car for the hassle (gas struts were dead, etc). Called him up to let him know I’d crashed the car, and as he said “oh shit” also let him know everything was organised, the parts had been dropped in already to be painted, and he just had to take the car in for fitting and to be buffed Monday. The car looked so good after the panel beater was done with it he managed to sell it for more than my friend was asking (no hard sell, the other guy just offered more money because he was so impressed with how shiney it was. Homer Simpson school of negotiation).

    Out of all my friends who have borrowed others cars and had any kind of accident, I’ve only ever seen myself and one other bloke go over the top to do the right thing ASAP, while most drag their feet and cause issues with friendships. Guess who is the only one of my friends I’d lend my car to?

  • No insurance company would ever do this (I’m presuming – happy to be proven wrong) but it would be cool if you could pay extra to have the insurance on your car cover you as a driver no matter what car you’re driving (for occasional use.) Unfortunately there would be too many variables that the insurer would want to control (e.g. the market value of the car) that I can’t see this ever happening.

  • Hi
    My brother crashed my mums fully insured car. Unfortunately he had a couple of drinks & was breathe tested at .051,just over.. Yes stupid..

    I assume my mums insurance won’t pay for damages.. Can other driver sue my mum or just my brother.

    Other driver is now trying to claim injury as well.

    Where does my mum stand??

    Please help


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