Insuring a vehicle that is not registered to you may seem complicated or unconventional, but it is in fact common and, in most cases, completely permissible. In order to insure a car that you do not own, you must include the owner on your insurance policy. Doing so covers their interest in the vehicle when it comes to potential losses as well as your liability as a driver.
Can You Insure a Vehicle That You Do Not Own?
It is possible to insure a car that you don’t own and one that is not registered in your name. A car should always be registered in the name of the owner, or title holder, so these two issues are one and the same. It is not only possible to insure a car you don't own, but it is fairly common. For example, you move away from home to go to college and take with you a car that belongs to your father. It is registered under his name in your home state of Texas, and you're attending college in Minnesota. After you graduate, you stay in Minnesota. How should you insure the car?
Since you no longer reside in the same household as your father, you can’t share an insurance policy. This is sometimes permitted if a college student takes a car to school and returns home for semester and summer breaks, insurance companies would likely consider you a permanent resident at your parents’ house in such an instance. In our imagined scenario, since you aren’t living in Texas with your father, you cannot include yourself or the car you drive on his policy. To properly insure the car that is registered in your father’s name, obtain an insurance policy in your new state of residence, Minnesota. Your father should be included on the policy even if it is in your name. Since the vehicle is registered to your father, he would receive any insurance payments for damages that might occur. Since you would be the policyholder, you would be protected from potential liability within your coverage limits in the event of an accident.
Can You Finance a Car and Insure It in Someone Else’s Name?
While it is possible to finance a car and insure it in someone else’s name, this can be difficult. This is because the car's driver is not its owner and therefore does not have what is known as an insurable interest in the vehicle. In other words, financing companies believe that a driver who does not own a vehicle has less incentive to drive carefully. In most cases, the financing company will require whoever took out the vehicle's loan to also hold the insurance policy on the vehicle. When you agree to the terms of an auto loan, you may find that you are required to insure the vehicle on your own policy.
Read More: Can You Finance a Car Without a License?
You can insure a vehicle that you do not own. To do so, list the owner on your insurance policy. Similarly, you can finance a vehicle for someone else and list them on your insurance policy as an authorized driver.
Danielle Smyth is a writer and content marketer from upstate New York. She holds a Master of Science in Publishing from Pace University. Her experience includes years of work in the insurance, workers compensation, disability, and background investigation fields. In addition to being the content writer and social media manager for Alliance Worldwide Investigative Group, she has written on legal topics for a number of other clients. She owns her own content marketing agency, Wordsmyth Creative Content Marketing (www.wordsmythcontent.com) and enjoys writing legal articles and blogs for clients in related industries.