This spring, it was announced that ICBC is considering penalizing drivers instead of vehicle owners. Considering that their reports show that one in five drivers in a crash are actually driving someone else’s car, this might not be a bad idea. While the process works itself out, you can take steps today to reduce your liability risk when you allow someone in your household (or otherwise) to operate your vehicle.
3 Steps to Reducing Your Liability Risk When Permitting Others to Drive Your Car
1. Make Sure the Vehicle is Insured for the Way They Will Use it
Your car insurance covers you for your normal course of automobile use. So, you must get a clear understanding of how the borrower intends to use your vehicle. If it falls under typical day to day stuff, such as running errands or driving to school, then the vehicle is probably covered under your insurance.
However, there are some scenarios where your insurance may not be enough. For example, with ride sharing services becoming a near certainty in BC, the borrower may plan to use your car as an Uber (or Lyft, etc.) one year from now. Given that ICBC, under the advice of the Transportation Network of Companies (TNC), intends to prescribe specific and mandatory insurance products for ride-share service drivers, your current automobile insurance would not be adequate.
ICBC has laid out four common class rates. You need to know them and take note of how they may impact liability when someone else is using your car. These common class rates are found below:
- Pleasure – Driving for typical day-to-day activities, including errands, driving kids to school, vacations, and so forth. Under this class, your vehicle can be used for up to six days in a calendar month for commuting, business or delivery.
- Commuting – Driving to work or school, in addition to pleasure use. There are different rate classes, which are contingent upon on how far you commute.
- Business – Driving for business purposes. This could apply to a salesperson or realtor (etc.) who drives to meet with customers.
- Delivery – Driving for delivery. There are rate classes that differ depending on the type of vehicle, what it delivers, and the distance travelled.
As you can see, it’s important to get clarity with respect to “user intent”, from whomever will be borrowing your vehicle. Once you know, talk to your broker to find out if you’re covered.
2. Define the Principal Operator
By definition, the principal operator is the person who will be operating your vehicle the majority of the time during the term of the policy. In most cases, this will be the registered owner of the vehicle. You may have been the principal operator of your vehicle when initial insurance was purchased, but overtime, this may have changed. This is quite common for households with children who become “of age”. The teen turns from weekend driver to someone who uses the vehicle on a daily basis. If this is the case, ICBC needs to know. Why?
ICBC sets your insurance premiums using a variety of factors, including the level of discount you may have earned over years of responsible driving. Inexperienced drivers (your teen, etc.) and those with at-fault claims are not eligible for those same discounts. By correctly identifying the principal operator, ICBC can then create a more accurate policy that reflects the appropriate risk-based rating. In addition, if you declare the wrong principal operator (or leave your name as the P.O. when you are not) you may be in breach of your insurance. And that has very clear and dangerous implications for your liability in the event of an accident. Download this ICBC pdf on what you need to know when it comes to identifying the correct principal operator.
3. Assess Their Characteristics as a Driver
This person may be your friend, co-worker, a loved one, or your own teenager. You may know them well as a person, and trust them to drive your car because of it. However, do you know them as a driver? Do you know what their temperament is like on the road? If so, consider that before you let them get behind the wheel. If you don’t have a lot of experience with them in that capacity, get some.
Let them take the wheel the next time you’ve got errands to run, or when going on a long weekend road trip. Take note of their habits and perform your own private assessment. Unsure of what to look for? Fret not, we’ve got you covered! Park Insurance has detailed a comprehensive list of characteristics of good and bad drivers. Memorize the checklist and pay close attention. If the hopeful borrower exhibits areas of concern, either don’t let them drive, or have a frank discussion with them about their bad driving habits and how they need to be corrected before they can use your vehicle. Sure, this may cause some tension, but it can exponentially reduce your liability risk.
Remember (under the current system) it is your insurance rate and experienced-driver discount may be affected in the event of a crash. So, think twice before loaning your vehicle and follow the steps above to minimize your risk. For more information about lending (or borrowing) a vehicle speak to the experienced insurance advisors at Park Insurance today.