Getting your car insured is one of the most important aspects of owning a vehicle. Insurance is a requirement. There are multiple types of insurance that you can settle on but no matter what, you should be sure you are properly insured.
If you’re not insured and something were to happen, you could find yourself in a world of trouble. But wait, insurance is so expensive! Maybe you’re having trouble qualifying for your own policy or having a policy on your own is outrageously priced. Or maybe, you’re driving a car that isn’t titled in your name but you’ve been told the insurance is your responsibility.
What are your options? Can you get car insurance if the car is in someone else’s name? There are possible exceptions for insuring a car that isn’t in your name but for the most part, insurance will require you to be an owner on the vehicle.
In this guide, we will walk through the possible exceptions that might be found for insuring a car that is in someone else’s name and what you can do to make sure your car is insured as it should be. We will share some tips on just what to expect in the process and the roadblocks that you might run into.
Insuring a Car Not in Your Name – Understanding the Process
Chances are you’re here because you’ve found yourself in a situation where you’re trying to get insurance on a car that isn’t in your name. Or maybe you’re just doing your research because you have found yourself in a situation where you need to know the details.
Here are some scenarios that might require insurance for a car in someone else’s name or an insured person driving your vehicle.
- Inherited a vehicle
- Teenage driver
- Helping a friend or family member
- Purchasing a new vehicle
- Allowing someone to borrow your car
- Significant other drives your personal vehicle
- Selling a car through payments made directly to you
Some people lend their car or help a family member out without ever realizing the repercussions of the action. It’s a common mistake and there are things you should be aware of in order to make sure you are insured when you really need to be.
Let’s talk a bit more about the process, the exceptions, and what you need to be aware of.
Insurable Interest
Insuring a car that is not in your name can be an extremely challenging task. There are many factors that can manipulate whether or not you will even be able to insure in such a situation. The primary factor is that you must be able to prove you have an insurable interest in the vehicle.
What does that mean?
Insurable interest is typically determined by ownership. If you inherited a vehicle and you’re working on title changes, you might be able to produce documentation of proof of the inheritance but the ownership will need to be transferred.
In most cases, you will need to own the vehicle or have an ownership interest in some manner. If you are not an owner, there needs to be a legitimate reason you are insuring the car. This can be very hard to prove and many insurance companies will not insure for this reason.
The best option is to co-title a car to include your name for ownership purposes and make insurance coverage far more simple.
Let’s dive into the scenarios where you may be insuring a car not in your name.
Can I Buy a Car for Someone Else?
Yes, you can. Perhaps you have a family member or a friend that you’re just trying to help out. They’re struggling or they’ve come upon hard times so you’re purchasing and inuring a car for them. Since it’s really your car, it only makes sense the title will be in your name.
But you’re not the one driving the car – they are.
You have a couple of options here.
You can turn everything over the friends you’re helping. Sign the title over to them and let them get the insurance on their own. But isn’t that why you’re here? They can’t get their own insurance right now so you’re going to carry it for them.
Instead of signing the title over to them, you should remain on the title. You can title the car with you and them and then leave the insurance in your name.
Is there a catch? You will need to inform your insurance company that you are not driving the car. They will need information for the drivers and you will be required to add them as insured drivers for the vehicle they are driving.
This could affect your rates but then the car and the drivers are appropriately covered.
Inheriting a Car
If you inherit a car because a spouse or household member passes away, this is typically already covered by your policy. It would be best to check specifically with your insurance provider to be sure. However, if your spouse or a household member passes and the car is left to another already listed driver, then you are good to go.
Now, if the owner of the vehicle passes and the car is left to an estate or another individual, the process changes. The best route here is to get the vehicle title changed over as soon as possible in order to acquire insurance.
There are exceptions in the case of an estate. A car that is part of an estate can be insured and covered for certain uses but it cannot be used for personal use by the driver until the ownership has changed to them and insurance is acquired in their name.
Teenage Drivers
A teenage driver in your home does not have to be an owner on the vehicle in order to be insured. When you have a newly licensed teenager in your home, you need to contact your policy holder immediately.
You can add the teenager to your policy as an insured driver without them being an owner of the vehicle. Also, you NEED to make sure you let your insurance company know if you have a teenage licensed driver. It is absolutely essential!
Add a Driver
Most of the time, if you are insuring someone who is not an owner or you are acquiring insurance for a car not in your name, the requirement will be to add a driver to an existing policy.
In this case, the insurance policy is written in the name of the owner of the vehicle, and you are listed as a driver on the policy. This covers all scenarios and requirements and gives the appropriate insurance coverage for the situation.
The Importance of Car Insurance
Why purchase car insurance? You’re a good driver and you pay attention. You always stop when needed, you drive the speed limit, you never text and drive. So, do you even really need car insurance?
The answer is yes.
Car insurance is a legal requirement. If you drive without it, you can be cited for not having car insurance. On the other hand, accidents can happen no matter how careful you are. You never know what type of situation you may find yourself in and you need to have adequate protection.
Car insurance is designed to offer you financial protection in the event of damage done to or by your car. This could mean injuries to the vehicle, the occupants of the vehicle, pedestrians, and other property.
The Road Traffic Act of 1988 requires all vehicles to be insured against liability to other people.
There are multiple types of car insurance and various coverage options. There are a ton of insurance companies that you can shop to find the best rate as well.
Insurance Coverage – Costs and Details
We mentioned earlier that there are numerous types of car insurance coverage. You can get liability coverage, full coverage, third-party coverage, and more. Each type of coverage has its own limitations and allowances.
For instance, with liability coverage, you cover only what you are liable for. This means, if you are responsible for an accident, your coverage would help with the damage incurred, typically for the other parties involved.
Then, there are other various factors that can affect your car insurance. One important decision is to consider the deductible. Insurance policies have a deductible, which means that you pay out of pocket that amount before they pay. If your deductible is $500 and your damage is $2,000, the insurance company pays $1,500 and you are responsible for the $500. The deductible amount can vary and the lower it is, the higher your premiums usually.
Here are a few other things that might affect insurance coverage costs.
- Location
- Driving record
- Insurance history
- Age
- Coverage limits
- Gender
- Marital status
- How much and where you drive
- Type of car
- Credit history
Conclusion
Ultimately, you need to be sure that the driver of the vehicle is covered at all times. This is one of the most common mistakes in insurance policies. You own a vehicle and you allow another person to drive the vehicle without adding them as a driver and then something unexpected happens.
The cost of adding a driver is far more advantageous than not being insured properly and dealing with the repercussions of that decision.
Aidan has been writing about personal finance for over 6 years. Prior to this, he worked as a Corporate Finance Analyst where he specialized in Due Diligence, Company Valuations and more. He is a CFA charterholder.
