Joint ownership of automobiles is a common practice among partners, family members, and roommates who wish to share ownership and insurance responsibilities for their vehicles. When multiple individuals co-own a car, it often results in cost-sharing, convenience, and access benefits. However, joint ownership can also lead to insurance complexities, especially when the co-owners live at different addresses or have varying driving records and credit scores. In this article, we will explore the insurance implications of jointly owned automobiles, including the challenges and solutions associated with insuring these vehicles.
The Common Practice of Joint Ownership
Buying a car jointly is a prevalent practice among individuals who share living arrangements and expenses. Partners, family members, and roommates often opt for joint ownership as it allows them to divide the costs associated with purchasing, maintaining, and insuring the vehicle. Living together in the same household typically simplifies insurance matters since individuals sharing the residence should be listed on the auto insurance policy, regardless of whether they are registered owners or drivers.
Listing Owners on a Car Insurance Policy
If both registered owners of a vehicle drive the car, it’s advisable to include both names on the vehicle insurance policy. This is especially true if the owners live together, regardless of whether one or both drive the car. Auto insurance companies typically ask about the people of driving age in your household to rate and include them on your policy. So, in such cases, joint ownership may not make much difference in insurance arrangements since both people may need to be included in the policy anyway.
However, it may still be possible to exclude one of the owners from driving the car under insurance policy with named driver exclusion if one of the owners becomes high-risk due to recent accidents and traffic tickets, depending on state rules and insurance companies. This means that if the excluded individual drives the insured vehicle and gets into an accident, the insurance policy will not provide coverage for any damages or injuries resulting from that incident. People choose this solution to avoid the high-risk driver from significantly increasing the premium.
When One Owner Should Be Listed
If only one owner will drive the car and the two owners do not live together, then only the owner who will be driving the vehicle should be listed on the car insurance policy as a driver. For example, if a parent co-owns a car with their child who now lives independently, only the child (the one who will drive the car) should be listed on the policy as the driver.
Typically, many auto insurance companies don’t allow inclusion of drivers who live in a different address on policies, except special circumstances. So, even though you may jointly own the vehicle, you may not be listed as a driver on the policy.
If you have a car with two owners but want to list only one of them on the insurance policy as the driver, some insurance providers may require the signing of an exclusion form. This form declares that the other registered owner will never drive the car. The other owner’s interest on the vehicle can still be noted on the policy so that they can get their share from insurance if the vehicle is totaled or stolen.
Insurance Coverage and Flexibility
Joint ownership of automobiles can have both benefits and drawbacks. One advantage is cost sharing, where expenses related to the vehicle can be divided among the owners. Additionally, joint ownership can offer flexibility in arranging auto insurance coverage, but it can also lead to complications, especially if the joint owners live at different addresses.
Shared Liability and Accountability
Joint owners of a vehicle are generally equally responsible for it, including any liability arising from accidents or traffic violations. Normally, the driver would be responsible for damages and injuries caused to third parties. So, if their liability insurance isn’t sufficient, the driver, who caused the accident, may be responsible for paying the shortfall out of pocket. However, there may be certain circumstances where the owner of the vehicle may be responsible too. For example, if it is deemed that the accident was caused by a poor maintenance or known issue with the vehicle, which wasn’t fixed by the owner, they may be responsible for the damages. In such cases, both owners may be responsible for the damages jointly or separately depending on the ownership structure and state laws. Also, traffic violation tickets caught by camera may be issued to the registered owners.
It’s important to note that the specific rules and regulations regarding car insurance, joint ownership, and coverage may vary depending on the state where you reside. Policies can also differ between providers, so it’s essential to consult with your insurance company to understand the best approach for insuring jointly owned vehicles based on your circumstances.