Buying Insurance for a Car You don’t Own

 

Buying insurance for a car you don’t own is possible, but it’s challenging. Still, there are options for getting insurance for a car that’s not in your name. If you are in one of these situations, you may want to buy car insurance without being the registered owner of the vehicle:

·       You regularly use a family member’s car

·       You frequently borrow a friend’s car

·       You’re a caregiver for the owner of the car, who doesn’t drive much, or at all

·       You bought a car from a private seller and you’re making payments and won’t get the title until it’s paid off

Depending on your circumstances, you might find one of the following options suitable for your needs.

            1.      Get Added to the Vehicle Owner’s Insurance Policy

If you live in the same household, it’s easier for the car owner to add you as a driver to their policy rather than you buying insurance for the vehicle (if you’re not already covered by the policy).

There may be no need for a separate auto insurance policy if you live outside the household and use a family or friend’s car only occasionally. Instead, have the owner check to see if you’re covered as a “permissive use” driver by their policy.

If you’re a caregiver and the person you help is an employer and not a family member, they’ll probably feel more comfortable having the insurance policy in their name. They should look into listing you as the primary driver. If they don’t have a valid driver’s license, they can be excluded from the policy as a driver and only listed as the car owner.

What if you regularly care for an elderly person who no longer drives? For instance, if you help someone who isn’t a household member and who owns the car but doesn’t drive the car. The owner can keep the insurance policy but be listed as an excluded driver and add you to the coverage.

            2.       Get Added to the Vehicle Title or Registration

Being on the title or registration (or both) gives you “insurable interest,” which means you prove to the insurance company that it’s in your best interest to prevent damage to the vehicle. With insurable interest, you can buy auto insurance without any hassle. If you’re a co-owner of a vehicle, see if you’re required to list the other owner on the policy as an additional insured.

If you’re using your parent’s vehicle but live away from home, consider being added to the title or registration so you can buy your own insurance for the car. Your parents can then save money by taking the car off their policy. If your parents gifted you the car, put it in your name and insure it as the owner.

If you buy a car from a private party with an installment plan, they may want to keep the vehicle titled in their name until it’s paid off. We’d warn against that. Instead, it’s better to transfer the title to you and list the seller as a lienholder on the title. You then can buy your own auto insurance policy.

            3.     List the Vehicle Owner as an Additional Interest on the Insurance

Additional interest means someone has a stake in the vehicle and is notified if you make changes to the policy. This is another option for getting auto insurance on a car you don’t own.

Insuring a car you don’t own and having the owner added in this way is permitted by some insurance companies since it keeps the vehicle owner involved. However, not all insurance companies allow this. To try this option, you’ll likely need to shop around. 

Buy a Non-Owner Car Insurance Policy

Another option is buying a non-owner auto insurance policy. But keep in mind this will be secondary to car insurance coverage the vehicle owner has on the vehicle.

Non-owner coverage gives you liability insurance protection if you cause an accident and the vehicle’s owner’s insurance limits aren’t enough. Since no car is listed on a non-owner insurance policy, comprehensive and collision coverage aren’t available.

Non-owner auto insurance policies typically aren’t offered if you frequently use the car. Instead, you need to try another option, such as being added to the vehicle owner’s insurance policy.

There are FAQ about Insurance for a Car You Don’t Own :

1.       Can I buy insurance for a car that’s not in my name?

Yes, you can insure a vehicle that you don’t own, but only if it’s allowed in your state and the car owner and insurance company are aware that you aren’t the owner.

Also keep in mind that It’s vital for the car insurance company to understand your situation and approve of it. If you don’t tell the insurance company you don’t own the vehicle, there can be consequences, such as a claim getting denied. Intentional misrepresentation of pertinent information is considered fraud.

It may be difficult to find a car insurance company that will sell you coverage for a car you don’t own. One potential concern is fraud—insurance companies may suspect the owner is a high-risk driver who is insuring the car in another person’s name to avoid paying high rates. You may find it’s easier to have the vehicle owner buy insurance for the car and add you to the policy as a driver.

2.       Do state laws allow you to buy insurance for a car you don’t own?

State laws regarding registration and insurance may dictate whether you can insure a car you don’t own. For example, New York car insurance laws say the name on the insurance card must match the name on the vehicle registration.

Check to see what your state laws require. If your name must be on the registration to insure a car, getting added onto the vehicle’s registration may be the best way to please the state and insurance companies to get the car insurance coverage you want.

3.       What is insurable interest for car insurance?

Insurable interest for auto insurance is having a financial stake in the vehicle. That means you would experience financial hardship if the car is damaged.

To prevent excessive claims, car insurance companies want to know it’s in the best interest of the person insuring the vehicle to stay out of accidents. You pose more risk if the insurance company can’t see a clear motive for you keeping the car in good shape.

Showing that an accident would negatively impact you can boost your chances of buying insurance for a car you don’t own. For instance, disclosing that you use the car to commute to work and you’d be unable to work without the vehicle would show that you have insurable interest.

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