Most car insurance policies in Australia are associated with a car, not a driver. Even if you’ve insured your own car, this policy usually won’t apply if you’re driving another vehicle, such as a friend’s car or a rental car. It’s important to check what’s covered before you get behind the wheel, just in case.
Imagine you’re helping a friend move house, and you’ve agreed to drive their car while they drive the moving truck they’ve hired for the day. While taking boxes from one property to the next, you’re involved in a car accident. No-one is hurt, but whose insurance policy should you make a claim with – yours, or your friend’s?
In many cases, it’ll be your friend’s car insurance policy that applies. A comprehensive car insurance or third-party car insurance policy is typically associated with a vehicle, which will have one or more drivers named in the policy. If you’re driving your own car, you’ll be covered if you’re in an accident, but not if you’re driving someone else’s car.
Even if you aren’t named as a driver on your friend’s car insurance policy, your friend should still be able to make a claim. However, they may need to pay an additional excess for an unlisted driver. Extra excesses may also apply if you are under 25 and/or have less than 2 years driving experience.
In some countries such as the USA, you may be able to add non-owner car insurance to your own policy, which provides limited liability coverage if you drive someone else’s car, but doesn’t cover damage to the vehicle, replacement rental or medical expenses. However, non-owner car insurance is not commonly available in Australia.
If you’ll be driving a car that you don’t own for a limited time, you may be able to take out a short-term insurance policy to make sure you’re fully covered. This could be a typical comprehensive car insurance policy, paid on a fortnightly or monthly basis, that you cancel after you’re finished with the car. Or it could be a Pay As You Drive policy where you only need to pay for the kilometres you think you will be driving in a certain period.
Insurance is often included as part of the rental arrangement when you hire a car, such as when you’re on holidays or otherwise need a temporary set of wheels. But many car rental companies will expect you to pay a significant excess if you have an accident while renting a car. You may be able to pay an extra fee in advance when hiring the car to reduce or waive this excess if required, though some comprehensive car insurance policies, travel insurance policies, and even some credit cards may offer to cover some or all of your excess costs.
This article was reviewed by Peter Terlato before it was published as part of RateCity's Fact Check process.
