Can I Loan My Car to a Friend?
Loaning your car to a friend or neighbour may seem like the most natural thing in the world. However, new ICBC regulations mean you should think twice before doing it.
ICBC and car loaning
On September 19, 2019, new ICBC rules concerning the loaning of vehicles came into effect. Motorists are now asked to list drivers who regularly use your car. In fact, every family member who drives the car requires listing, even if they might only drive it once in a while. List any person who might drive your car at least 12 times a year, or once a month. Failure to do so means if they get into an accident with your vehicle, you face a one-time financial consequence.
Unlisted driver protection
If you purchase Unlisted Driver Protection (UDP) coverage from the ICBC, then lending a car to a friend is not usually an issue. Initially, UDP is free, so it is certainly worthwhile to enroll. If you let a friend borrow your vehicle and they get into an accident, you must pay for UDP at renewal time. Currently, that fee is $50 annually. If you lend your car to more than one person and they get into a crash, your UDP costs will rise.
Not everyone qualifies under UDP. Do not let an unlicensed driver get behind the wheel of your car. You are also not covered if you lend the car to someone who previously had an accident in your car within the past five years.
Keep in mind that UDP is not designed for family members and other regular drivers of your vehicles. They require primary listing with the ICBC.
Unlisted driver penalties
If someone is not listed on your ICBC policy, gets into an accident, and you did not opt for UDP coverage, the one-time financial penalty applies. That is known as the Unlisted Driver Accident Premium. The ICBC calculates this amount by checking what your Basic or Optional premiums would have cost had you listed this person. When premium differences occur, the financial penalty is 15 times the difference for both the Basic and Optional premium amounts. The maximum penalty is capped at $5,000 for Basic premiums, and twice the amount of the Optional premium.
If the accident happened due to extraordinary circumstances, such as an unlisted driver borrowing the car to take someone for emergency medical care, the financial penalty does not apply.
The principal operator
Your ICBC premiums are calculated by the person listed as the principal operator of the car. Premiums are determined based on the principal operators driving 75 percent of the time, and other listed drivers using the car for the remaining 25 percent.
Never misrepresent the principal operator. Parents may prove tempted to that when purchasing a vehicle for their children and save money on premiums. In a worst-case scenario, if your child gets into a serious accident and it turns out they should have been named as the principal operator, the ICBC may consider it a breach of the insurance contract. That means you could end up footing the enormous bill from the collision.
If the ICBC suspects that the person responsible for the crash was not the principal operator, it does not have to prove this beyond a reasonable doubt. The standard is simply probability.
For example, if a teenager wrecks a valuable automobile and a parent was listed as the principal operator, ICBC representatives may become suspicious about whether the latter was the primary driver most of the time. The ICBC will conduct an investigation, which may include interviewing neighbours and others with firsthand knowledge of who drove the car most often.
Contact a Vancouver ICBC lawyer
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