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Can I insure a car I don’t own?

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In most cases, it makes sense for a car title and insurance policy to be under the same name. Even if the law doesn’t require it in your state, many insurance companies won’t underwrite a policy for someone who isn’t the owner of the vehicle. But there are some situations when it could be beneficial to insure a car you don’t own. For example, you might be a teenager looking to take on some financial responsibility for a car your parents own. Or, you might be a caretaker using another family’s car as part of your job. 

Some auto insurance companies will allow you to insure a car you don’t own in certain situations, and there are also some alternative options to insuring a car you don’t own. So if you’re wondering, “can I insure a car I don’t own,” this article can help you understand the details. 

Can you insure a car you don’t own?

In most cases, insurance companies won’t allow you to insure a car that’s not in your name. That’s because you need to show insurable interest in the vehicle, which means you’re the one who will be financially responsible for any damages that occur to your car. If someone else owns the car, that can be hard to prove. 

However, some insurance companies might provide you with a policy if you regularly drive the vehicle. For example, if you have your parents’ car with you in college and it’s your only mode of transportation, your insurance provider might make an exception. Every insurer will have different rules, so you may want to shop around for a different auto insurance company if your current provider can’t accommodate you. 

State laws preventing you from insuring a car you don’t own

If you’re trying to insure someone else’s car, the biggest obstacle you’ll face is finding an insurer to underwrite the policy, unless you live in New York. New York is the only state that legally requires the name on the insurance policy to match the name on the vehicle’s registration. This makes it impossible for New York drivers to insure a car they don’t own. New York does allow two names on the registration, so if you are included as a co-title, insuring the vehicle is possible in that situation. 

How can I insure a car I don’t own?

If you’re looking for a way to insure a car you don’t own, you have several options. Some will be more costly than others, or require more paperwork, so carefully consider your choices before making a decision. 

  • Demonstrate need: If you can prove to your insurance company that you are the primary driver and you need access to the vehicle because you don’t have alternative transportation options, your insurer may be willing to work with you to provide a policy. 
  • Add an additional interest: You may be able to get an insurance policy in your name and add the owner of the car to your policy as an additional interest. This won’t raise your insurance rates like adding another covered driver would. If you choose to go this route, the owner of the vehicle will need their own policy if they wish to drive the car, since they won’t be covered under your policy. Typically in this scenario, you have regular use of the vehicle and it’s in your possession more than the owner.
  • Add yourself to the owner’s policy: If you live with the owner of the vehicle, you can add yourself to their policy. This might raise the cost of the premium, but will generally be cheaper than having two separate policies for each driver. And most insurance companies require that every driver in the household be listed on the policy or specifically excluded anyway. If you don’t live with the owner of the car, most insurance companies won’t add you as a covered driver. However, most will make an exception for a college student who is away at school with their parents’ vehicle, since their primary address is still their home address. 
  • Add your name to the title: If the car is eventually going to become yours, you might consider a title change. Once your name is added to the title of the vehicle, you won’t have a problem getting an insurance policy for that car. But if the owner has a loan on the vehicle, they’ll need to contact the lender for permission. If granted, the lender will order a new title. If the owner has paid off the car, you’ll both need to go to the DMV to fill out paperwork. At this point, you’re technically insuring a car you own.
  • Get a non-owners policy: Non-owners policies supplement, rather than replace, the owner’s policy. Typically, they only include liability coverage, but it’s possible to find a policy with uninsured motorist coverage and medical payments coverage as well. A non-owners policy will provide supplemental coverage no matter whose car you drive.

Alternatives to insuring a car you do not own

If the owner of the vehicle has paid off their auto loan, they can ‘gift’ you the car and transfer the title to you. The owner should be aware that they will have to pay gift tax if the fair market value of the car exceeds $15,000. However, you won’t need to pay sales tax if the car is gifted to you. 

You and the owner would both need to sign a bill of sale, and then the owner releases ownership of the vehicle via a trip to the DMV. You’ll then take the signed title to the DMV, where you’ll be issued a new title and registration. 

Of course, you always have the option to buy the car from the owner as well. This can make sense if you have the funds and the owner still has a lien on the car. Here’s how to sell a car with a lien

The takeaway

  • You can potentially insure a car you don’t own if you’re a college student using your parents’ car, or if you can prove to your insurance company that you need the car and have an insurable interest in it.
  • If you need to insure a car you don’t own, you can also do so by adding your name to the owner’s insurance policy, having your name added to the title, adding the owner as an additional interest on your policy or getting a non-owners policy. 
  • You can’t insure a car you don’t own if you live in New York, unless you add your name to the title or the owner’s insurance policy. 

It can be tricky to insure a car that isn’t yours, but there are some situations that may require you to do so. Be honest with your insurance company and explain your situation. If your current insurance company can’t accommodate your needs, you could shop around for another provider that will. There are also several ways you can show an insurable interest in the vehicle to make it more likely that your insurer will underwrite a policy for you.

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