True friends stab you in the front.

– Oscar Wilde

The bawdy 19th century Irish poet/playwright may have been onto something. If you're going to get screwed over by a friend, it's best you see it coming.

Throw a car into the mix and your friendship may not be strong enough to survive should that friend ask to borrow the vehicle.

Case in point: a reader wrote to ask what their friend John's options were after a pal of John's borrowed his car.

I always wonder about “friend of a friend” stories. I know my friends wouldn't give a hoot about my insurance, but the reader's tale went like this:

My friend John lent his car to his friend, Sam. Sam got into a minor collision with another car.

The accident was Sam's fault for pulling out in front of the other car and damage to both cars is more than $1,000. No one was injured, but police were called. Sam was charged with an offence under the Highway Traffic Act.

John had an accident two years previously and has several speeding tickets on his driving record, so he didn't report the accident to his insurer, instead paying out of pocket for the damage to his car.

John offered to pay for the damage to the other car, but the driver declined and reported the accident to their insurer.

John's insurer called him up to tell him he should have reported the accident. Ultimately, he gets hit with a 50 per cent rate hike that will be in effect for several years. John asked Sam to reimburse him for the cost to repair his car and to pay the additional insurance premiums. Sam refused. Now there's a surprise.

The question is this: Can John sue Sam in small claims court for both the cost of the damage to his vehicle and the increased insurance premiums?The damage was approximately $3,500 and he's now paying $6,400 a year for insurance.

The answer is no. When John gave permission for Sam to drive his car, he also gave him coverage under his insurance. If you lend your car, you lend your insurance.

Given Sam was charged by the police, the ticket is Sam's problem, but the accident is John's headache.

So will this ticket affect Sam's insurance if the accident was to John's car and not his? Yes.

But because John lent out his car, he's responsible for the people who are driving it. To add insult to injury, John paid for his repairs when he didn't have to. If he had informed his insurer, it would have covered the cost of his repairs without anyone having to sue anyone.

When an insurance company finds out about an at-fault accident your rates will likely increase whether you or the insurer pays for it. Hope luck is on your side if you're bold enough to try to get the insurer to reimburse you.

If I were John, I'd go to an online service that compare car insurance rates to see if I could find an insurer whose rates would be cheaper.

Many drivers believe that if they have tickets and accidents no other insurance company would want them, but this is exactly when they should shop around. There's no risk in switching to another company if it is offering a better rate, so take it.

Further, look at taking out a six-month policy. As tickets drop from a driver's record and accidents get older, rates will go down. I'd also consider quoting for no collision coverage given John's paying for his own repairs anyway. Why pay for coverage but not use it?

All accidents should be reported to your insurance company, particularly where the other driver makes it obvious they intend to pursue a claim through their insurance. If you don't tell your insurance company your side of the story, who will? A friend?

Lending your car has serious ramifications, particularly if you already have accidents or convictions, because an accident could sink your rate.