Lending Out Your Car and Your Insurance
Do you lend your car to a family member or friend? If so, they are also covered under your auto insurance. However, they must have your permission to use the car and hold a valid driver’s license. If someone causes damage while driving your car, the insurer may not always cover the damage. This depends on the coverage provided by your auto insurance. Keep this in mind when lending out your car.
Your car is insured by license plate while it is on loan
Car insurance is linked to a car's license plate number, not to a person. This means that others are covered when they drive your car.
When you insure a car, you also specify who the regular driver is. This is the person who uses the car the most and is listed on the insurance policy. That’s usually you. An occasional driver is someone who drives only occasionally with your permission. That person is also covered by the insurance.
Does someone else use your car regularly? If so, you must notify your insurer to avoid any insurance issues. Check the policy terms and conditions to see if this applies to your insurance.
The Risks of Lending Out Your Car: Damage and Fines
Your car is insured when you lend it to someone else. However, as the owner of the car, you remain liable for any damage or fines caused by someone else while driving your car. Fines, damage, and accidents are recorded under your name with your insurance company.
This could mean that a new insurance company won't insure your car if you buy a new one in the future. Be aware that someone who borrows your car may not be familiar with it, which increases the risk of damage.
Tip: Make clear agreements
Still want to lend out your car? Make sure to clearly agree on who is liable. For example, draw up a contract with the borrower in advance. Specify in the contract who is responsible for what. This will help you avoid unpleasant misunderstandings later on. This is especially a good idea if you’re lending your car out for an extended period or if the borrower is taking your car abroad.
Check your auto insurance in advance
Special insurance to lend out your car is often not necessary. Always check the policy terms and conditions to see exactly what your coverage entails. You face the greatest risks if your car is covered only by liability insurance or limited comprehensive coverage. If the borrower causes an accident, you will not receive a payout for your own damages. You or the person borrowing the car will have to pay for those damages yourself.
Third-Party Liability + Comprehensive (All-Risk) Coverage for a Rental Car
If you, as the owner, have third-party liability and comprehensive insurance, both damage to third parties and damage to the borrowed car are covered. However, if your car is a total loss, you’ll usually be reimbursed for the car’s current market value, minus the deductible. That amount often isn’t enough to buy a comparable car.
Additional Clause
Some third-party liability and comprehensive insurance policies include an additional clause regarding damage caused by someone else. This means, for example, that only damage to the car caused by the owner or his or her partner is covered. Damage caused by a friend or other family member is not covered.
You can lose your no-claims years by lending your car to someone else
What if someone damages your car? All the claim-free years you’ve accumulated are tied to the insured car. If you file a claim, you’ll move down a step on the no-claims discount scale, which means you’ll pay a higher premium—even if someone else was driving the car at the time of the accident.
Damage Abroad
Are you lending your car to someone who’s going on vacation abroad? Some insurance policies have restrictions or require additional coverage for use outside the Netherlands. Ask your insurer about any additional requirements or documents you may need. For example, a Green Card, which is required in many European countries.
The borrower may also need a written authorization. This authorization states that you, as the owner, give the borrower permission to drive your car abroad.
Lending Your Car for an Extended Period
If you lend your car to someone for an extended period, you must notify your insurance company. The insurer will then determine whether the risk—and therefore the premium—remains the same, or whether the driver poses a greater risk and the premium needs to be increased. If the person borrowing the car is a new driver, there’s a good chance your insurance will cost more.
Lending Your Car Through a Car-Sharing Platform
If you share your car through a car-sharing platform, standard auto insurance is often not enough. Many platforms offer supplemental car-sharing insurance that provides coverage during rental periods. This insurance temporarily replaces your own policy and protects you against damage, theft, and liability.
Some platforms handle this automatically, but with others, you’ll need to purchase insurance yourself. Check your policy terms and conditions to see if damage incurred while renting out your car will affect your no-claims bonus. Without adequate coverage, you’ll have to pay for the damage yourself. Make sure you’re properly insured before renting out your car.
Frequently Asked Questions About Lending Out Your Car
Can I lend my car to someone else?
Yes, you may lend your car to someone else, such as a friend or family member. However, the person must have a valid driver’s license and use the car for normal purposes. Please note: different rules apply for commercial use or rental.
Am I insured if I lend my car to someone?
Yes, your auto insurance usually remains valid when you lend your car to someone else, but the coverage depends on the terms of your policy. With many insurers, damage caused by another driver is automatically covered, as long as that driver had permission to drive. Always check your policy to avoid any surprises.
What happens if the borrower causes an accident?
If the borrower causes an accident, the damage is covered by your auto insurance. This may affect your no-claims years and your premium. With third-party liability insurance, only damage to others is covered, while third-party liability plus comprehensive (all-risk) insurance also covers damage to your own car. Some insurers offer a “third-party use” option for additional protection.
What are the risks of lending out my car?
The biggest risks are damage, rising insurance premiums, and the loss of no-claims years. In addition, as the owner, you are liable for traffic violations and fines. In the event of theft, an insurer may be reluctant to pay if the car was voluntarily lent to someone else. Be sure to make clear agreements with the person borrowing the car.
Who is liable for damages if I lend my car to someone?
As the owner, you are usually liable, even if someone else causes damage with your car. The damage will then be recovered from your insurance, which can affect your no-claims years and premium. It is therefore important to make clear arrangements about this in advance.
What happens if my friend or family member gets a ticket while driving my car?
Traffic tickets are initially sent to the vehicle owner. Therefore, you are responsible for ensuring that the ticket is forwarded to or collected from the driver who committed the violation. This applies to speeding tickets, parking tickets, and other traffic violations.
Do I need to notify my insurance company if I lend my car to someone?
For occasional use, you usually don’t need to notify the insurance company. In the case of regular or long-term use—for example, if someone borrows your car for several weeks—it’s wise, or even required, to report this. This will help you avoid problems with insurance claims. Check your insurance policy terms and conditions or contact your insurance company.
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