What Happens If You Let Someone Else Drive Your Car?

Understand How Insurance Works When Someone Else Drives

Letting a friend or family member borrow your car might seem harmless—but it’s important to understand how this affects your car insurance.

Many car owners are unaware of how insurance rules apply to occasional drivers. Check out Insurspy Car Insurance to compare policies and make informed decisions about coverage.

In New Zealand, most car insurance policies cover the vehicle, not the driver. This means your car may still be covered if someone else is driving it with your permission—but there are important limitations and conditions to be aware of:

• Named Driver Policies: Some insurers only cover drivers specifically listed on the policy. If someone not named on your policy causes an accident, your claim may be denied or you could pay a much higher excess.
• Open Driver Policies: Some policies allow any licensed driver to use the car, but typically at the cost of higher premiums or excesses for “inexperienced” or “non-named” drivers.
• Driver Age Restrictions: Many policies exclude drivers under 25, unless they are specifically named. Check your policy wording carefully.
• Licence Type Requirements: If your friend only has a restricted or international licence, some insurers may not accept a claim if they cause an accident.

What Happens If There’s an Accident?

If the person you loaned your car to causes an accident, here's what could happen:

• Your Policy May Still Cover It – If the driver met all your insurer’s terms (age, licence, permission, etc.), your comprehensive or third-party policy will typically still cover the damage.
• Your Excess Will Still Apply – Even if you weren’t driving, you will usually need to pay the policy excess.
• Your Premium May Go Up – Because the claim is lodged under your insurance, you could lose your no-claims discount or face a premium increase when you renew.
• You May Be Liable for Uncovered Costs – If the driver was excluded by your policy, you may have to pay for all damages out of pocket.

Important: Never let someone drive your car if they’re under the influence, unlicensed, or not legally allowed to drive. Doing so could void your cover entirely.

How to Stay Protected

Before handing over the keys, take these steps to protect yourself and your car:

• Check your policy wording – Look for terms like “named driver only,” “open driver,” “under 25 excess,” or “excluded drivers.”
• Add them as a named driver – If someone will be using your car often (e.g., a partner or flatmate), it’s safer and often cheaper to name them on your policy.
• Inform your insurer of any changes – Keeping your policy up to date ensures fewer surprises if you need to claim.