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Typically, when purchasing car insurance, auto insurance providers assume that the person taking out insurance on the vehicle and the titleholder is the same.
As such, you will be taking insurance in your name for the car you own, and if you are involved in an accident, the insurer will pay for the resultant damages.
But what happens if you want to purchase insurance for a car that you don’t own? What if the vehicle belongs to someone else, but you drive it on a regular basis?
There are several ways to approach this issue. First of all, make sure that you are fully protected so that in the case of an accident, neither you nor the titleholder will experience any financial losses.
Before you purchase car insurance, compare quotes from various providers before you decide to purchase coverage from one of them. Comparison shopping gives you a better chance at obtaining the coverage you need at an affordable price.
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What does the law say?
Car insurance is simply something you can’t do without. Most state laws require drivers to meet certain auto insurance requirements before they are allowed to drive. Auto insurance requirements vary from state to state.
Again, in most states, there are no specific laws saying that you have to be the owner of the vehicle for you to insure it.
So, technically, you are allowed to take out car insurance on a vehicle that whose title is not in your name.
However, just because something’s not illegal doesn’t mean that it’s easy to pull off. In most cases, auto insurance providers will need you to be the vehicle owner to get coverage for a car.
You may find yourself in a difficult situation if that is not the case. Some providers will sell a car insurance policy to you, but just because you purchased online, they didn’t ask the right questions.
The problem with buying without addressing ownership issues is that you will have problems when it comes to having a claim settled.
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Buying Insurance for a Vehicle You Don’t Own
There are certain situations where you might want to purchase insurance for a car that you don’t own.
- For instance, if your parents get old and can’t drive anymore, you may choose to purchase insurance for the vehicle and use it to run your errands – with their permission, of course.
- If you are a parent, you may want to purchase car insurance for your child’s car which may not be as easy as it sounds.
The problem with purchasing car insurance — in your name — for your child is that car insurance providers rank younger drivers as high risk, and as a result, attract higher rates.
When you purchase insurance for your child under your name without notifying your insurance company, in the event of an accident, your claim may be denied.
It’s much easier to purchase coverage in the first scenario (old parents), which may also be a problem if the car is financed under your parent’s name.
However, insurance companies are different in many aspects, including their requirements when selling auto insurance coverage.
The best way to shop for coverage for a vehicle that is not registered under your name is to shop around. Search until you find a provider that openly states that they will provide coverage even if the car’s title is not in your name.
In addition to that, comparing quotes from different providers also helps you get cheaper coverage that still meets your auto insurance needs.
Insurance is based on certain universal principles, one of them being the principle of insurable interest. Having insurable interest simply means that you have something to lose if the vehicle was to be totaled in an accident.
If you want to insure a car you don’t own, you will have to prove insurable interest. Proving insurable interest when you don’t own the vehicle is a tough feat, but it’s not entirely impossible.
It will still be hard to prove insurable interest if the vehicle is under the ownership of your child.
The best way to go around it to get a new title that lists you and your child as the vehicle owners, that’s actually what most providers will advise you to do.
There is one problem though. The DMV might have problems with a vehicle whose ownership is under two different but related people. Otherwise, it’s a perfectly good workaround when insuring a vehicle you don’t own.
Adding a Named Driver to the Policy
Instead of being named as the vehicle’s owner, most auto insurance providers will just want you to be a named driver.
The policy will be in the owner’s name, but you will still be able to make the payments and be fully covered in the event of an accident. It’s legal, it’s accepted by all auto insurance companies, and it works.
You don’t even have to be listed as a vehicle’s driver to pay the premiums. You can be a financial benefactor; the payment will not benefit you in any way. It’s a good approach, but issues may arise if your relationship with the titleholder changes.
Insuring a vehicle that’s under someone else’s ownership is not easy. Shop around, compare quotes until you find an insurance company that’s willing to provide the right type of coverage in your situation. Enter your zip code below to get started.