Licensed drivers who don’t own vehicles can, of course, drive legally. However, while car insurance covers that driver through the car they’re in most of the time, there are a few points to keep in mind about how insurance coverage works for those driving vehicles they don’t own. We’ll look at some of the more common scenarios here, and how insurance rules apply.
Occasional driver status
Most drivers start out as non-owners of vehicles since car purchase procedures include obtaining insurance first in all parts of Canada. Buying insurance for a car means having a valid driver’s license. Therefore, someone with no driver’s license can’t own a car that could be driven legally.
The route for most drivers is their addition to a family car insurance policy, such as that of a parent. In this case, the non-owner name and driver’s license number are part of the policy, so the terms of that policy extend to the non-owner, provided that these reflect accurately how the non-owner uses the vehicle.
For example, if the car is insured with a parent as a pleasure use vehicle, but the non-owner listed on the policy drives it to work daily, the insurance company could deny claims made on the policy if it’s discovered that the vehicle was indeed being used daily for a regular purpose.
This is a common point of car insurance procedure that many insurance clients forget or disregard. Each policy applies to the circumstances surrounding the use of the vehicle and when these circumstances change, the insurance company has a right to know, or the client could be in breach of their duties under the policy agreement.
Borrowing someone else’s car
An insurance policy, particularly personal auto insurance, may be purchased by a driver, but in fact, the insurance follows the car. The VIN number of a vehicle appears on the pink insurance slip, matching policy to that car. So as long as a person has the consent of the car’s owner, the terms of that car’s policy protect the person borrowing the vehicle, and there’s no need to inform the insurance company about this.
This covers incidental use only. Say, for example, that a non-owner borrowed a neighbor’s car every Thursday to buy groceries and run errands. While certainly, a friendly gesture on the car owner’s part, this becomes “occasional use” in the eyes of the insurance industry, and the non-owner should now be listed on the insurance policy, since their use of the vehicle is regular and recurring, increasing the chance that they may have an accident or another claimable incident while in possession of the vehicle.
Insurance and car rentals
Rental cars are another non-owned vehicle situation. The rental cars themselves are insured under commercial policies. All regions of Canada require this. However, renters are responsible for damage or loss while the car is in their possession. Rental agencies sell waivers to protect against this but at a high daily rate.
Most insurers offer non-owned vehicle endorsements. When a driver who owns and insures a personal vehicle rents a car, the terms of their personal insurance extends to cover the rental as if it was their own when they’ve added that endorsement. The same applies to other borrowed vehicles that may have less insurance coverage than the non-owning driver.