As a car owner in Australia, you may find yourself in situations where you need to lend your car to someone else, whether that’s a family member, friend or colleague. However, it’s essential to understand how this could impact your car insurance coverage. This useful guide explores the implications of letting someone else drive your car, the importance of listing regular drivers and what happens if an unlisted driver has an accident in your car.
In Australia you can usually let anyone drive your car as long as they have a valid driving licence, even if they aren’t listed on your car insurance policy. However, if the person regularly drives your car and is not listed on your insurance policy, you risk potential coverage issues in the event of an accident. A common exception is learner drivers, who are often covered as standard without needing to be listed on the policy as an additional driver. Regardless of who you are lending your car to, you should check your insurance documents before letting them get behind the wheel to understand what sort of cover is provided and any requirements or limitations.
Adding additional drivers to your car insurance policy may result in higher premiums. Insurers assess risk based on the listed drivers and their driving history, so adding someone with a bad driving record may push up the cost of your insurance. If you add a young or inexperienced driver, such as someone under 25, you may face increased costs due to the higher perceived risk associated with these drivers. However, you will likely face even higher excess costs if they are unlisted and have an accident while driving your car.
Many insurers make it easy to add and remove additional drivers on your policy, so specifying anyone who drives your car frequently will provide peace of mind that you are covered in the case of an incident.
If an unlisted driver has an accident while driving your car, the situation can become complicated. Some insurance policies may provide coverage in such cases, but it might come at the cost of an unlisted driver excess payment. This means that if an unlisted driver is involved in an accident while driving your car, you'll have to pay an additional excess on top of your standard excess.
Moreover, an additional age-based excess might apply if the unlisted driver is under 25 years old. Younger and inexperienced drivers are statistically at higher risk of accidents, and insurers adjust their premiums accordingly.
In other cases, your insurer may refuse to cover any claims involving unlisted drivers, leaving you personally liable for the damages or injuries caused, so it is important to check your product disclosure statement (PDS) before letting anyone borrow your car.
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