Lending your car: Insurance cover for the car owner and borrower

Nowadays, it’s getting more common to borrow a car. So whether you are the car owner or borrower, you should understand whether the insurance will provide coverage in case of an accident. Today, our Kwiksure experts will shed light on the key points about lending a car.

Can someone drive my car and be covered on my insurance?

First and foremost, you should remember that car insurance typically follows the car, not the driver. In other words, when you lend a car to someone, you are virtually lending your car insurance policy as well. If there’s an accident, you, as the car owner, will be held responsible for any compensation or deductibles.

Can I add other drivers to my car insurance policy?

If you often lend your car to the same driver, you can consider adding him/her to your existing policy. The process is rather simple and you can ask your insurer to help deal with it. Usually, the process will take only a few days. Of course, there are a number of requirements for the new driver before he/she can be added to your plan:

1. The driver needs to possess at least 2 years of experience driving a car or has had a valid driving license for at least 2 years.

2. Most plans require the driver to be over 25 years old, or he/she has to reach the legal driving age, which is 18 years old.

3. The driver needs to be claims-free for a car accident in the past 5 years.

4. Finally, the driver must hold a valid driving license issued by Hong Kong or other countries acknowledged by the Transport Department.

Does adding a new driver affect my premium?

Insurers usually allow adding up to four new drivers to a policy. No fees will be charged for the second driver; but for the third driver there will be a charge of 10% of the premium and for the fourth driver 20% of the premium.

Furthermore, if the new driver is under 25 years old and has less than two years of driving experience, the insurer will charge an extra 40% of the original premium. Some insurers may also charge an administrative fee that does not exceed HKD $500.

What about lending my car temporarily?

If you decide to lend your car to another person on a short term basis, you can take note of the following points:

1. Check to ensure that the borrower’s driver license is valid. If the borrower’s driver license is invalid, you as the car owner can also be held liable and charged by the police.

2. More high-end automobiles have restrictions on insurance such as limiting the number of drivers, or not allowing the car owner to lend the car. If you plan to lend your high-end supercar to your friend, it’s best to consult with your insurer or consider adding the borrower to your insurance policy.

3. Individual car insurance policies do not provide coverage if the car is used for business purposes such as driving for a ride-sharing company. Therefore, before you lend your car, you should be careful of what your car will be used for.

4. If you lend your car to a friend, who’s then in a car accident, this will make the claim process more complex. As a car owner, you need to prove that you did lend your car. According to our experience, as long as you can provide proof, the insurer will still be willing to process your claim.

5. If you’re borrowing a car through an app instead of a friend, you should read the terms and conditions in the app carefully. This is because the insurance secured by the driver will override your insurance, leaving your coverage separate from any accident and repairs that happen while the car is rented. However, the driver’s policy wording and how the car is used may affect you as well. If, for example, you use the app to lend your car to someone who then uses it for commercial purposes, the insurance may not cover this, meaning you will be held liable should anything happen. So you should read any potential documentation before agreeing to lend the vehicle.

6. We suggest that you report your actual usage of your vehicle to the insurer. For example, if your two children are constantly using your car, it’s best you add them to your policy. Otherwise, if the insurer finds that there are regular drivers not listed in your policy, they have the right to cancel your policy.

7. Most motor insurance policies in Hong Kong provide temporary cover when you lend your car to other drivers. But some of them do have their limitations or conditions (such as no commercial use). Thus, before lending your car, you should better go through your terms and conditions.