Most states require you to have car insurance on every vehicle you own, but what if you’re driving a vehicle that’s registered in someone else’s name? Typically, you can’t insure a vehicle that’s not registered in your name, but there are ways to make sure you’re covered while driving it. Whether you’re driving a friend or family member’s car, or you’ve been gifted a vehicle that belongs to someone else, the legal owner is responsible for insuring it. Additionally, there are special policies that offer non-owner vehicle insurance that may be helpful in some situations.
Can I insure a car that is not in my name?
If you regularly borrow other people’s cars, you may have wondered, “Can I insure a car that’s not in my name?” The answer is, generally, no, you can’t insure a car that’s not your own. To fully understand why, it might help to look at how insurance works.
Insurance profits
Insurance is technically a financial product. Even though it “covers” your car, insurance doesn’t stop damage from occurring. Rather, car insurance gives you financial protection by covering claims costs if you are involved in an accident.
Because car insurance not only covers damage to your car, but also damage you cause to other drivers’ cars (depending on the type of coverage you have), you must have what’s called an insurance interest in that car. That is, you must have a financial interest in the car to insure. If the car is not registered to you, you do not have an insurance interest in it. Therefore, you cannot insure it.
Auto Insurance Claims
When a car insurance claim is paid, the insurance company pays out the funds it has paid for the damage to the vehicle to the policyholder. If you’re allowed to insure cars you don’t own, you may even receive money for damage to a vehicle in which you have no financial interest.
Think of it this way: You borrow a friend’s car and crash into a pole. If you were able to insure the car, you could claim damages and be compensated under your collision insurance, even if your friend had a financial interest in the car. But it’s your friend who doesn’t have a financial interest in the car; they paid for it. Because you don’t have a financial interest in the car, you have no right to compensation from the insurance company.
How to Get Non-Owner Auto Insurance
Although only the legal owner of a vehicle can insure a car, it’s a good idea to understand your other options to financially protect yourself from the unexpected. Even if you don’t own a car, you might be able to get the coverage you need by purchasing auto insurance.
Car rental
If you rent a car, you have several options for auto insurance coverage. If you have auto insurance on another vehicle, that coverage will likely apply to the rental car as well. However, if you don’t have full auto insurance that includes comprehensive and collision insurance, you won’t be covered to repair any damage to your rental car. You also won’t be covered if your vehicle is stolen or vandalized. It’s a good idea to check with your insurance company before renting a car to see how coverage will apply to this other vehicle.
If you don’t have your own auto insurance, consider purchasing the insurance offered by the rental car company. In fact, if you can’t show proof of insurance on another car, you may be required to purchase the rental company’s insurance before renting the vehicle.
Borrow a car from a friend or family member
Before you drive a borrowed car, it’s a good idea to ask a friend or family member to check with their insurance company. Often, their insurance will cover you even if you’re not listed as a full-time driver on their policy. This is known as “authorized use.” In these cases, the owner and their insurance company are only allowing you to drive the car temporarily, so you’re covered while you’re using it.
If you borrow someone else’s car for an extended period of time, you may need to be listed as a driver on the owner’s car insurance. Additionally, you may need to update the address where the car is stored to your own address so that your insurance can be properly assessed. It’s important to be transparent about the situation, as not using a borrowed car regularly (definition varies by company) and notifying your insurance company could result in your claim being rejected as a false statement.
If you rent cars often, but not always the same car, you may want to consider non-owner auto insurance. These policies typically provide liability coverage and may also provide bodily injury coverage, medical payments, or uninsured motorist coverage.
Being gifted a car
Perhaps your parents or grandparents have just purchased a new car and agreed to give you their old one as a gift. They may offer to keep the car insured, but is that the right way to handle the situation?
It probably depends on your living situation and age. If you still live in the same household as your parents (or whoever gave the car to you) and you’re a minor, you might be able to keep the car insured on your parents’ insurance and add yourself as the owner of the car.
However, if you’re an adult or live elsewhere, you’ll likely need to get your own car insurance. Insurance companies understand that vehicle registration and insurance changes don’t happen overnight, so it may be acceptable to leave the vehicle on the previous owner’s insurance for a few weeks. However, you should do your best to insure the vehicle in your own name as soon as possible, register the vehicle, and transfer the title to yourself.
Company car
If you work for a company and are provided with a vehicle to drive, you still need to insure that vehicle. Typically, your employer owns the vehicle, so you have no insurance interest. As the driver, you will be covered under your employer’s business auto insurance. You are not expected to, and cannot, carry personal auto insurance on a company vehicle that you do not own.
However, if you run a business and buy a company car, you’ll need commercial auto insurance. The vehicle must be insured for business use, not personal use. If your company is the registered owner of the vehicle, the insurance policy must be in the company’s name.
