After you find and purchase your new or used car, you’ll probably want to get on the road with it right away, but you need to register and insure your car first. Second to finding your perfect car is finding the right insurance company to insure it, so that you’re protected in the event of an accident. Insuring your car can be tricky, though, if you aren’t the legal owner of the car. This can be the case if you’re gifted a car by someone or passed down a car from someone, which is common amongst younger drivers receiving a car from their parents.
If your name isn’t on the title of the car, which would make you the legal owner, it can be difficult to insure your car. However, you do have some options to help you insure a car you don’t own in the event of an accident. The problem insurance companies have with allowing individuals whose names aren't on the title of the car to purchase insurance for the car is because of the possibility of insurance fraud, and because of the insurable interest of the person trying to buy the car insurance.
What is insurable interest?
Insurable interest is the reason it can be difficult to insure a car you don’t own. Insurable interest is a person’s “interest in an item, event or action when the damage or loss of the object would cause a financial loss or other hardships.” Essentially this means that insurance companies want their customers to have some sort of investment in the items they insure that would cause them hardships if the item was damaged. In the case of a car, if you aren’t the legal owner of the car, you don’t have a lot of insurable interest in the car in the eyes of an insurance company. Insurance companies are concerned that, without insurable interest, you would be more careless about damages because the car isn’t your financial responsibility.
There are different ways that you’re able to get car insurance for a car that you don’t own. The easiest way would be for whoever’s name is legally on the title of the car to add you as a driver on their existing car insurance policy. However, some states have laws in place that only the person who is the legal owner of the car can insure it. If this isn’t possible, there are a number of other methods you can try to insure a car you don’t own.
1. Get the car co-titled
Getting your car co-titled with the current person on the title is one way you can prove your insurable interest to an insurance company. Plus, it would also make you an owner of the car. If the car is paid off and there’s no loan in place currently on it, it shouldn’t be that difficult to acquire a co-title.
If a loan on the car is still currently being paid off, it might be more difficult to get a co-title. It varies state to state on how simple or how difficult it is to be added to a title or to get a new title entirely. Look on your state’s Department of Motor Vehicles website to find out what the process will be like.
2. Convince your insurance company of your insurable interest
If it’s not possible for you to get a co-title on the car, you can discuss your financial stake in the car with your insurance company and see if they’ll allow you to purchase an insurance policy in your name for the car. If you can prove to your insurance company you will be primarily driving the car in order to get yourself to work, school, or another place regularly, that will show you have a financial interest in the car, as it’s your primary means of transportation.
Another common reason you may not be on the title of the car is if you’re a college student using a parent’s car while away at school. If you live in a state that allows people other than the titled owner of the car to buy car insurance, you can potentially discuss your situation with your insurance company and they may allow you to buy a policy.
3. Purchase non-owners car insurance
Although it only provides liability coverage, non-owner car insurance can provide you with some coverage until you’re able to purchase the car from the owner, get your name on the car’s title, or while shopping around for an insurance company that will let you purchase a policy without being the legal owner. Typically, non-owner car insurance is for individuals who borrow cars frequently, but don’t necessarily consistently drive one. It may not be the best option for a long-term situation, but it can provide a temporary solution and prevent any lapses in your car insurance.
The most important part of the process of finding the right car insurance for you is to always be honest with your insurance company. If they find out you may have omitted any important details that might affect your policy, your car insurance can be voided and you’ll have to find a new insurance company. By being honest about your situation when you’re trying to insure a car you don’t own, your insurance company can help you find the coverage and policy that will best serve you and your needs.
When you’re shopping around for your car insurance, see who other consumers have rated as the best car insurance company in your state or compare car insurance quotes below.
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Summary: 3 ways to insure a car you don't own
- Get the car co-titled
- Convince your insurance company of your insurable interest
- Purchase non-owners car insurance
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