There are a few situations where you might want to insure a vehicle that’s not in your name. For example, maybe you drive a family member’s car regularly, or maybe you received a car as a gift and it’s registered in the giver’s name. Insuring a vehicle in these circumstances can be tricky. We’ll walk through when you can and can’t insure a vehicle that’s in someone else’s name.
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In most cases, you cannot insure a vehicle that is not titled and registered in your name. However, there are exceptions. To understand why, it helps to know a little about how insurance works.
What Insurable Interest Is and Why It Matters
When an auto insurance company writes a policy, it wants to know that the policyholder has a stake in keeping the vehicle safe and in good condition. This is known as insurable interest.1 It’s a core part of how auto insurance works. Normally, you can prove insurable interest easily by producing a title and registration for the vehicle in your name.
When someone files a claim, the insurance payout goes to the policyholder. So, let’s say a car insurance company allowed you to hold a policy for a car you didn’t own, like your friend’s car. If you hit a tree, you would get the insurance money, even though you have no financial stake in repairing your friend’s vehicle, or insurable interest in the vehicle. That’s why, in most cases, you cannot insure a car that’s not in your name.
Ways to Get Coverage for a Car You Don’t Own
If you’re trying to insure a vehicle in someone else’s name, you’re not out of luck. There are several ways you can get coverage.
Co-titling: You can become a partial owner of the vehicle by adding your name to the car’s title. The exact process depends on which state you live in, but essentially, it involves co-applying with the owner by filling out paperwork at the Department of Motor Vehicles (DMV). Unfortunately, if the owner hasn’t paid off the car, applying for a co-title often isn’t an option. To know whether you’re eligible, contact the institution with which the owner financed the car. Keep in mind that the insurance premiums are likely to increase if you co-title a car. Also, some auto insurance providers don’t allow joint insurance unless you live with the policyholder.
Adding another person to the policy: If you live with someone and drive their car frequently, they can (and should) add you to their auto insurance policy. Some auto insurance providers require policyholders to add their partners to the policies if they live together. If you get into an accident while driving your partner’s car and the insurance company discovers you’re living together, it could deny the claim.
GOOD TO KNOW
If you live with someone and drive their car frequently, they should add you to their auto insurance policy.
Getting non-owner insurance: This is a special type of auto insurance policy for people who drive others’ vehicles sometimes but don’t own one themselves. Typically, non-owner car insurance costs less than a standard policy and is limited to liability auto insurance coverage. Occasionally, you can add bodily injury coverage and underinsured motorist coverage, but you cannot get collision or comprehensive coverage. Non-owner insurance can be a good option if you rent cars or drive someone else’s car frequently (for example, if you work as a nanny and drive the family’s car). It isn’t a good idea if you live with your partner and drive their car, though. In that situation, your partner should add you to their policy. Get a quote for non-owner auto insurance.
How to Insure a Car You Receive as a Gift
If you receive a car, the person who owns the car should transfer the title to you. In most states, you will not have to pay sales tax. If the gift-giver financed the vehicle in their name, you can return to the dealership or financial institution together to co-sign or transfer the loan. Then, you can register and title the car in your name, and buy auto insurance easily.2
When someone gives you a car, the easiest way to insure it is to ask them to transfer ownership to you and then to purchase auto insurance normally.
If you have your own auto insurance policy, including collision coverage and comprehensive coverage, it often extends to rental cars as long as you rent the vehicle for personal use and stay within the U.S. and Canada. Before you purchase additional coverage at the rental car counter, check your personal policy to avoid paying for duplicate coverage.3
Some credit cards offer rental car insurance when you use the card to pay for the rental. This coverage is typically secondary to what your auto insurance company offers if you have a personal policy.
If you drive rental cars frequently but don’t own a vehicle yourself, non-owner insurance could be a good idea. Some auto insurance providers even offer stand-alone rental car coverage.
What Happens When I Borrow a Car From a Friend or Family Member?
It’s usually OK to borrow someone’s car on occasion, as long as you have their consent to drive the vehicle. If you get into an accident while driving a borrowed car and don’t have your own auto insurance policy, in most cases, the car owner’s policy will cover you.