Lending your car in Luxembourg: what your car insurance (really) covers

Can you lend your car in Luxembourg?

Good news: yes, lending your car in Luxembourg is perfectly legal. Freedom of contract prevails. But for this loan to go smoothly, the person taking the wheel must meet three simple conditions:

• A valid driving licence: an original licence, currently valid and recognised in Luxembourg.
• The right to drive: no current driving ban, whether administrative, medical or judicial.
• Occasional use: the loan must remain exceptional and temporary, not a habit. If travelling outside Luxembourg, the driver must have a written authorisation from the owner and a copy of the owner’s identity document. 

A quick tip before you rush off: have a look at your policy. Some policies include an “exclusive driving” clause (or named-driver-only clause). If this applies to you, lending your car to a third party is simply prohibited and could lead to unpleasant financial surprises in the event of a claim. If you wish to lend your company car, be sure to inform your employer.

We also advise you to clearly distinguish between occasional and regular lending (spouse, children, close friends, etc.). If the loan is habitual, you must add secondary drivers to your motor insurance policy. This will allow them to benefit from the same cover as the main driver, particularly in the event of an incident involving bodily injury.

Does my insurance cover the person I lend my car to?

In Luxembourg, remember one simple rule: it is the car that is insured, not the driver. In practical terms, here is how it works:

• Damage caused to a third party: this is covered by your third-party liability insurance, even if you were not behind the wheel. If your friend makes a driving error, the victim will be compensated by your insurance.
• Damage caused to your own car: this depends on your plan. With third-party cover, the repairs remain at your expense. With “Casco”, they are covered according to the terms of your policy.
• If a third party causes the accident: the other party’s third-party liability insurance will apply. 

What if the driver is at fault in an accident?

If the person you lent your car to causes an accident, it affects you directly in two ways:

• The excess: if you are covered by Casco, an excess will apply to the repairs.
• Your no claims bonus: as the accident is recorded on the vehicle’s policy, it is your no claims bonus scale that takes the hit. As a result, the amount of your insurance premium will increase at the next renewal date, even if you were not in the car and did nothing wrong.

Who pays the excess in the event of an accident?

The policyholder always pays the excess to the insurer or garage, as the insurance is attached to the vehicle. Insurance companies never get involved in the financial arrangements between you and the person you lent your car to: reimbursement of the excess or compensation for the loss of bonus is between you.

What to check before lending your keys

To lend your car with peace of mind, just a few checks are enough:

• Ask to see the original driving licence, making sure it is legible and valid.
• Read through your policy again to check that no exclusive driving clause is active.
• Tell the person about the conditions of use and the existence of an excess in the event of an at-fault accident.
• Check that all mandatory documents (insurance certificate, vehicle registration document, tax disc, valid roadworthiness certificate) are in the vehicle.