Do I Have to Be the Car Owner to Buy Insurance?

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You can insure a car not registered in your name, but the process can be cumbersome and tedious depending on the insurance provider and your situation. It is important to note that, although some providers will allow you insure a vehicle you do not own, the vast majority of insurance providers will not. A company determines whether or not it can sell auto insurance policy to a non-owner depending upon its policies and guidelines. If you are considering purchasing auto insurance for someone else's car, such as your mother or teenage son, it is your responsibility to inquire about the company's policies and determine whether it will allow you to buy coverage.

Requirements

  • Most states require that, at the very minimum, car owners and drivers have liability protection for their vehicles. Some states further require owners to have other forms of coverage, such as personal injury protection and protection for uninsured or underinsured drivers. Apart from the state's minimum requirements for auto insurance, other forms of coverage are also popular among car owners. Common auto insurance policies include comprehensive coverage and collision and theft. Although not required in most cases, these policies protect owners from unforeseen events such as accidents and collisions.

Insurable Interest

  • Most insurers do not sell auto insurance to non-owners because of a law prohibiting individuals from buying coverage for an item they do not have an insurable interest on. If this law was not in place, an individual could benefit from another's misfortune, in certain situations. Suppose a co-worker takes out an auto insurance policy on you, considering you to be a risky driver. If you get into an accident, the co-worker will benefit by collecting on the insurance. The law thus minimizes this opportunity of fraud by mandating that insurance buyers have an insurable interest on the automobile they wish to protect.

Demonstration

  • Some companies will allow you to buy auto insurance for someone else's car only if you are able to demonstrate an insurable interest in one form or another. This demonstration can be in a number of ways. For example, if you want to protect a family member, such as your teenage child, you can do so by verifying that both you and the driver occupy the same residence and have the same last name. Additionally, the insurance provider may also require that the name of the actual owner of the vehicle appear on the policy. That is, you will not be able to purchase insurance without the consent of the primary owner.

Title Transfer

  • Apart from family members, you may want to insure a vehicle you do not own under special circumstances. Such a situation arises when you purchase a used vehicle from a private seller, and the seller still has an outstanding loan on the vehicle. Since the seller has an outstanding loan, the title of the automobile will have to be passed to the seller before it can be sold. If you pay and start driving the car before the title is transferred, you will be in a situation where you have to insure a car that is not in your name. This is one of the most common situations where insurance providers' customers wish to insure a vehicle they do not own.

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References

  • Photo Credit Police officer at the scene of the Jeep and car road accident. image by Dragan Trifunovic from Fotolia.com
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