It may be possible to insure someone else’s vehicle, depending on several factors. Most states allow automobiles to be insured by a person who isn’t the legal owner. However you need to check this since few states require that the policy and registration have to be under the same name. Secondly, you need to find a carrier that has no objection to it.
Under normal circumstances title holders buy coverage for their vehicles and other drivers are listed on the schedule. So, it is understandable that any other arrangement may be questioned. Carriers would want to see that there is a sensible reason behind it and people involved aren’t trying to pull the wool over their eyes. Often people have dubious reasons for wanting to buy coverage for a vehicle under another person’s name other than the owner. One of the most common ones is to avoid paying high premiums due to bad records.
Can I Insure Someone Else’s Car?
There can be perfectly sensible reasons that lead to people asking this question. This usually happens when the principal driver hasn’t got the title but still needs to pay the premium. It may be easier if the keeper has no intention of using it. The easiest way is that the legal keeper buys the coverage and lists you as a driver. However, this may not be possible or preferable.
For example, the owner may not have a valid license and therefore a different arrangement may be required to buy car insurance without a drivers license so that it can be operated on the roads. In this case, he/she cannot operate it and it may be understandable that you want it and pay for the costs.
Another example is that you may want to use an auto that is not being used by parents. It may be an honest thing to do to insure the vehicle on your name especially if you are living in a different address. There may be easier and less complicated arrangements that can help you solve the problem. For instance, the parents can buy a policy on the basis that you are the primary (or sole) driver of their automobile.
Quite a few companies are also happy to provide personal auto insurance to business people who registered vehicles under their LLCs or S-corporations. When you use a trade name you will need to buy a commercial package. That may not reflect the real use of the vehicle if the business person enjoys it exclusively just like a personal car. Also, a commercial policy would be more expensive than a personal.
Furthermore, there may be legal reasons why someone wants or needs this. Contracts like leases can place such an obligation on the person who leased it. In that case, you need to note the interest of the leasing firm, depending on conditions of the lease agreement. Executors of an estate would have legal responsibility to safeguard the automobiles that belonged to the deceased.
Some carriers would seek pure insurable interest, which is the basis of every policy and it makes sure only the people who suffered real loss can claim. They have to make sure that you have enough interest in the vehicle. Otherwise, you may intentionally want to crash it so that you can collect money.
Regardless of checking or not before selling, companies will always want to make sure that there is no fraud going on before they pay a claim. When the title and policy holder differ they have one more reason to be suspicious and investigate it in detail. You should keep this in mind.
On the other hand, a number of them may be happy with the situation based on who enjoys the use of the car at the moment. If you are the principal driver of a vehicle you clearly stand to lose if something happens to it (even though it isn’t yours) and therefore it can be argued that you have an interest in it. Many of them accept this argument and are therefore happy to provide coverage for a vehicle under your name when the title registration is different (usually a relative).
How to Avoid Problems when Insuring a Car You Don’t Own?
As long as the state laws don’t prevent you, you can probably find a company that will provide an agreeable coverage. However, you should pay close attention to the following points to avoid problems when you have a claim.
1. Always Be Open and Honest
You may have a perfectly good reason for wanting to protect a car that isn’t yours. In the same way, you need to understand that companies would want to make sure you are not trying to deceive them or trying to get cheap automobile insurance. Don’t just try to make it happen but make sure that the agent understands what is happening and is happy with it.
The worst thing you can do is to try to pull a fast one. You may think that you got away with it but they will see through it when it matters, just before paying a claim. Then, everything blows on your face terribly and you end up facing thousands of dollars in damages and claims.
2. Be Clear about Who is an Interested Party
You shouldn’t leave any room for confusion and therefore the titleholder’s interest should be noted on the schedule clearly. It is best to clearly state the status, as this question will come up if you ever have a claim. Some of them may require explicit consent from the vehicle’s keeper anyway.
3. Make Sure You Understand the Implications
As it doesn’t legally belong to you, the insurer may not want or be able to pay you for comprehensive and collision claims, especially if the auto is totaled. You should know this in advance and prepare the grounds for proper compensation and payment. That is why you may be more comfortable about this three party arrangement when you are related to or know the person well.
4. Make Sure You Can Claim on the Policy
You need to ensure that you, the owner and the carrier know exactly what is going on so that you don’t have any problems in case of a claim. They may not ask many questions and take the money when they are selling. However, they will ask all sorts of questions when you have a claim. It is your job to make sure you will not have problems in the future.
In addition, you should know the conditions attached to it. Usually the registered name would be excluded from driving the vehicle to avoid any moral hazard issues.
5. Be Aware of Expensive Premiums
Some companies that are happy with selling a policy for a car registered to someone else can be fairly expensive. You should explore other avenues before accepting such quotes.
When you are honest, a good solution can be found for almost all situations. For example, carriers can arrange a policy for the owner with full knowledge that you are the principal user and let you pay for it.
You should avoid attempting to conceal the real truth and not engage in any arrangements that can be seen as fronting for a high-risk motorist. Companies can refuse claims and press charges against people when they learn about fraudulent activities. They have every right to make sure everyone pays a fair premium. Otherwise, it would be unfair to raise the rates for other customers due to heavy losses caused by the high-risk group who somehow managed to get cheaper rates unfairly.
How Can I Insure an Auto Owned by Someone Else?
Probably the easiest and least complicated way is to get the owner insure the automobile and list you as the principal driver.
If this is not possible or preferred option you have several other options as discussed below;
- You can add an auto that is not yours to an existing policy. This may be the cheapest option available. As discussed above, the carrier should know whose it is. Most of them wouldn’t have a problem with this arrangement especially when the owner of the vehicle isn’t going to use it. A few of them will probably exclude him/her anyway. And it is possible that the current provider adopts the view that coverage and registration have to be under the same name. In that case, you may have to switch.
- You can buy a separate policy for a vehicle that is not registered to you and this would be the option if you don’t already have one. See above.
- If both of the above options aren’t feasible you can still buy non owner auto insurance to make sure you have at least liability coverage when you drive a car that doesn’t belong to you. Remember that such policies don’t include damages to the auto in question.
As mentioned several times above, each one may have a different approach or objection. The task is to find the company that will listen and come up with a suitable coverage for unique circumstances. In fact, you should find a few of them who are happy to quote so that you can compare them for protection, conditions and prices.
Insuring a Car in Someone Else’s Name vs. Transferring the Title
Transferring the title to you may be a more favored option in many ways in comparison to covering a vehicle that doesn’t belong to you. Here are the points to consider.
- The legal keeper of the vehicle would remain responsible for it no matter who drives or/and insures it until the title is transferred. If the vehicle is involved in an accident, injured third parties can always sue the owner regardless of his/her involvement in the collision. This is more apparent in a case of a parent and a child because the parent is more likely to have assets and easier target for injury lawsuits.
- Having it outright is almost always cheaper than having no entitlement simply because not many companies would consider the latter that will reduce the alternatives.
- When you have the title you don’t need to worry about who gets future claim settlements and you don’t need to explain each time. In any case, when it is registered to a different address and the schedule shows a different address it may often raise questions.
- For temporary arrangements it may be fine for you to insure an automobile that belongs to your parents or partner. However, it may be more sensible to make the transfer if the arrangement is permanent.
- When you buy a policy for a vehicle that isn’t registered to you its title keeper cannot be included as a driver. However, you can include almost anybody when you own the vehicle. In addition, you decide what to include in coverage and you don’t need to check with anyone.
The bottom line is that there isn’t one answer that fits everyone. You will need to decide based on circumstances and what is available to you. However, you should consider conventional options first because not common or accepted methods are usually difficult and expensive.