Your Friend Borrowed Your Car and Got Into an Accident. Who Pays?
Summary: If your friend crashes your car, your car insurance can still provide coverage if the driver is authorised and your policy terms are met. However, your No Claim Discount (NCD), excess payments, and future premiums could still be affected, even if you were not behind the wheel.
It is common to lend your car to a family member or friend. But when an accident happens, many Malaysians assume the driver is automatically responsible for everything. In reality, the situation is more complicated because car insurance in Malaysia generally follows the car and its policy, not just the person driving it.
Here’s what happens when someone borrows your car and gets into an accident, who pays for the damages, and what you should know before handing over your car keys.
What Is An Authorised Driver?
An authorised driver is someone who has your permission to drive your car and is legally allowed to drive in Malaysia.
Depending on your insurer and policy, authorised drivers can include:
The policyholder
Your spouse
Family members
Friends or colleagues who have your permission
Always check your policy wording because insurers can have different definitions and conditions.
Named Driver vs All Driver Coverage
Some insurers offer different options depending on who will be driving your car.
Named Driver
Only drivers listed in the policy will receive coverage under the terms specified by the insurer.
This option is often suitable if only a few people regularly drive your car, such as your spouse or children. Some insurers provide the first two named drivers for free, while additional names may require you to pay an extra fee.
All Drivers
This option allows other authorised drivers to use your car without being specifically named in the policy, subject to the policy terms and applicable excesses.
It offers greater flexibility if different family members or friends occasionally use your vehicle.
Tip: Before lending your car, check whether your policy has any restrictions on who can drive it.
Not sure which one is more suitable for you? Read our detailed guide on named drivers versus all drivers before purchasing your car insurance.
In What Situation You May Still Need to Pay Excess?
Even if your car insurance can cover for the accident, you might still need to pay an additional excess of RM400 if the driver falls under certain categories:
Below the age of 21 years old
Holds a learner’s (LDL) or probationary (PDL) driving licence for less than two years
Is not listed as a Named Driver in your car insurance policy
Understand more about the compulsory excess fee and how it affects your car insurance claims.
Who Pays For the Repairs?
Who ultimately pays depends on how the accident happened.
Scenario 1: Your Friend Hits Another Vehicle
If your friend was at fault and your policy covers the incident, your insurer will usually handle the claim according to your policy coverage. However:
Your NCD could be affected.
Any applicable excess or deductible is usually paid by the policyholder based on the insurance policy.
Your insurer may settle the third party’s damages according to the policy terms if any claim is made against your insurance.
Although your friend caused the accident, the insurance claim is generally made under your policy because you own the insured vehicle.
Scenario 2: Your Friend Only Damages Your Car
If no other vehicle is involved, you can submit an own damage claim under your comprehensive policy.
Keep in mind that your NCD will reset to 0% after making an own damage claim. You may also need to pay any applicable excess before the insurance provider pays for the rest of the own damage claim.
If you decide not to claim insurance, you and your friend can privately agree on who pays for the repairs.
Scenario 3: Your Friend Injures Someone
If the accident causes injuries or death to another person, your third-party liability coverage can help compensate affected parties, subject to your policy limits and terms.
Serious accidents invoking injuries should always be reported to the police as required under Malaysian law.
Scenario 4: Your Friend Was Speeding or Breaking the Law
Your car insurance does not automatically become invalid just because the driver received a traffic summons.
However, the insurer could reject your claim if the accident involved serious breaches of policy conditions or illegal activities, such as:
Driving without a valid licence.
Driving under the influence of alcohol or drugs.
Using the vehicle for unauthorised purposes.
Participating in illegal racing.
Get to know some of the common general exceptions in a car insurance policy that the insurer never covers.
Will Your NCD Be Affected?
Unfortunately, yes. If a claim is made under your comprehensive policy, your NCD will reset to 0% for the next renewal, even if someone else was driving your car.
For example:
Your friend causes an accident.
You submit an own damage claim.
Your insurer pays for the repairs.
Your NCD is affected during your next renewal.
This is one reason why some people choose to settle minor repair costs privately instead of making an insurance claim.
Learn what you should do if your NCD resets to 0%, and what it means for your car insurance premium.
Can You Recover the Costs From Your Friend?
You and your friend can agree that they reimburse you for:
Insurance excess
Repair costs not covered by insurance
Higher renewal premiums resulting from the NCD loss
However, this is a private agreement between both parties. Your insurer is generally not involved in collecting money from your friend.
What If Your Friend Breached the Law?
According to the Road Transport Act 1987, Section 109, the registered owner of a vehicle can be held responsible for offences committed by someone driving their vehicle. This means you cannot simply walk away scot-free if your friend breaks the law while driving your car.
You could face consequences if your friend:
Drives with an expired driving licence
Does not have a valid driving licence
Is suspended or disqualified from driving
Drives under the influence of alcohol or drugs
Uses your car for illegal activities
Even if you were not directly involved, you could still face consequences as the registered owner. According to the General Insurance Association of Malaysia (PIAM), your car insurance claim could be rejected, your car insurance policy could be voided, and your vehicle could be impounded by the Road Transport Department (JPJ) or Polis Diraja Malaysia (PDRM) until the fines or legal matters are resolved.
Furthermore, under Section 111 of the Road Transport 1987, if you knowingly encourage, assist, or allow someone to commit any of the offences above while driving your car, you can be charged with abetment. If convicted, you could face the same fines, imprisonment, or other penalties as the driver who committed the offence.
Before Lending Your Car
Before letting someone borrow your vehicle, follow this quick checklist first:
Check their driving licence.
Understand your car insurance coverage.
Explain the insurance excess.
Make sure your car insurance and road tax are active and valid.
Renewing your policy before it expires helps ensure continuous protection for your car regardless of who's behind the wheels.
Protect Your Car and NCD With PolicyStreet
Choosing the right car insurance is one of the best ways to protect yourself financially if someone else gets into an accident while driving your car.
When comparing policies, consider these items if you share your cars with other drivers:
Comprehensive car insurance
Suitable authorised driver coverage
Named driver or all driver add-ons if available
Competitive premiums without compromising protection
To keep your car protected all year round, remember to renew both your car insurance and road tax before they expire. With PolicyStreet, you can conveniently renew both together in one place, saving time and avoiding unnecessary hassle.
Whether you’re renewing your car insurance or protecting your NCD for the long term, choosing the right policy today can save you thousands in the future.
Get your free car insurance quote today and protect your car before you hand over the keys.
Frequently Asked Questions
1. If someone else borrows my car and gets into an accident, who pays?
If your car insurance policy covers the driver and the policy conditions are met, your insurer will generally handle the claim according to your coverage. However, your NCD and any applicable excess could still be affected, especially if an own damage claim is made.
2. Does my car insurance cover someone else driving my car in Malaysia?
Yes, many comprehensive car insurance policies cover authorised drivers, and most of the time, it is also available as an add-on. However, the exact terms can differ between insurers. Always check your policy before lending your car.
3. Will I lose my NCD if someone else crashes my car?
It depends. If you make a claim under your own insurance policy, your NCD will reset to 0% at your next renewal. You can retain your NCD percentage if you file for third-party claims in situations where the person driving your car is not responsible for the damages.
4. What happens if my friend is not listed as a named driver?
Your claim may still be covered by your insurer even if your friend is not listed as a named driver, but you will have to pay a RM400 compulsory excess fee. However, if you already have All Drivers coverage for your insurance policy, anyone who drives your car is automatically covered.
5. What if the person driving my car did not have a valid driving licence?
If you knowingly encourage, assist, or allow the person to drive your car while being unlicenced, you can be charged with abetment. If convicted, you could face the same fines, imprisonment, or other penalties as the driver who committed the offence.
6. Will insurance still pay if my friend was drunk or driving recklessly?
No. Your car insurance claim could be rejected, your car insurance policy could be voided, and your vehicle could be impounded by the Road Transport Department (JPJ) or Polis Diraja Malaysia (PDRM) until the fines or legal matters are resolved.
7. Can I claim insurance if my friend only damaged my own car?
Yes. If you have comprehensive car insurance, you can usually submit an own damage claim. However, your NCD will reset to 0% at the next renewal.
8. Does car insurance follow the car or the driver in Malaysia?
Car insurance follows the insured vehicle and the policyholder. However, the additional drivers can be covered through the Named Drivers or All Drivers coverage.
