The insurance implications of driving someone else’s car

When you drive someone else's car you can often be putting yourself in a precarious situation. Before you jump behind the wheel of a car you rent or borrow, make sure you think about whether or not you’ll be covered if something goes wrong.

What your friend’s insurance may cover

All registered vehicles on the roads in Australia have Compulsory Third Party (CTP) insurance, which covers you in the event you’re in an accident where an injury or death occurs. However, it won’t cover anything else. That means no cover for:

• damage to property or other vehicles
• theft; or
• damage to the car itself in an accident.

This is why people get comprehensive cover. However, don’t think that just because your friend’s car has comprehensive insurance, you’ll be covered. This isn’t always the case, and you could be unknowingly exposing yourself to risk when you borrow a mate’s car.

Check your friend's insurance policy

This may sound excessive, but if you’re going to be driving someone else's car, you’re going to need to check their policy or, at the very least, have them do it for you. The last thing you would want is to find out after you’ve gotten into a sticky situation that you won’t be getting any help from their insurer. With platforms like Uber Carshare, though, you don’t need to worry.

Why would you want to rent a car instead of borrowing a friend’s?

Whenever you book a car, you’re covered by Uber Carshare’s damage and loss cover. One of the biggest advantages of using Uber Carshare to borrow a car is that unlike when you use a friend’s car, you can trust that you are protected when you drive.

Whenever you rent a car through Uber Carshare, you're covered by damage and loss cover. In the unlikely event of an accident, the excess that you would need to pay would be a maximum of $2,000, as long as you haven’t breached the terms of use. You can choose to reduce your excess to $500 for an additional $1.50 per hour of your booking, or $18 for the day.

The insurance risk of borrowing a friend’s car

When you aren’t ridesharing or leasing a car, insurance can be a little more confusing. Not all policies are the same and while some comprehensive policies do cover drivers other than the person named on the policy document, many don’t. In some cases, you’ll need to nominate an occasional driver. Other times, additional drivers will be covered but with more expensive premiums or excess.

The thing to think about is the worst-case scenario. If you’re involved in an accident but your friend chooses not to lodge a claim on your behalf, you could be personally liable for all the costs incurred by those in the not-at-fault vehicles.

This is why you might want to consider using a car sharing service like Uber Carshare instead. These programs allow you to use vehicles that aren’t your own but provide you with damage and loss cover so that you don’t ever have to worry about being involved in these types of situations.

Richard Laycock is an insurance expert at finder.com.au.