Car insurance policies are as important and necessary as having a car itself. Every year, there are over 6 million passenger car accidents in the US and the cost of repairing vehicles and the cost of medical treatments are way more than you can imagine. This is why the government has made it mandatory to carry a liability insurance policy to cover the cost of property damage and medical treatment for accidents you might cause. So it’s a no-brainer that insurance policies are specific to people and vehicles.
This is why it is usually the vehicle owner who gets the insurance policy for the car. But there are many cases where another person would be driving someone else’s car regularly. So what happens if they crash someone else’s car? Is there a way to insure a car that is not in your name, or you are not the owner of?
Before we get to the possible ways of getting car insurance for a car that you don’t own, or why it is difficult to insure a car that you don’t own, it is important to see how auto insurance works.
How Insurance Work
Auto insurance companies charge different people different rates for the same auto insurance coverage. This is because different people have different risk factors associated with them. When you buy an auto insurance policy, the insurance company is taking your share of the risk, so that in an accident (which depends mostly on your driving), the company will pay for the cost of repairs and medical treatments.
This is why these companies assess everything, from your driving record, and parking area, to your credit score to see if you pose a higher risk of making an insurance claim. Companies don’t want policyholders who are more likely to make a claim. This is why getting car insurance for a car that you do not own becomes so complicated. It increases the risk of you making an insurance claim. How? Here’s why.
Insurable interest is the biggest reason why you cannot get insurance for a car that you don’t own. It is a very simple concept to understand. Insurance companies provide you coverage for things that you have a stake in. If you own a car, that means you’ve invested your money in it, and it is valuable to you. So when you get an insurance policy for it, both you and your insurance company don’t want the car to get damaged. But this is not the case with someone else’s car.
If you get insurance coverage for someone else’s car that you don’t own, the insurance company has all the stake in it. If you crash the car, there’s nothing for you to lose, but the company will have to pay the insurance amount. This increases the risk of you making an insurance claim. This is one of the main reasons why you cannot insure a car that is not in your name.
Why You Cannot
Apart from the insurable interest, there are other reasons why insuring someone else’s car is either not possible or very difficult. The most common being the state might not allow it. You need a boatload of documents to get an auto insurance policy, and one of these documents requires proof of ownership of the vehicle. Many states require that you own the vehicle to insure it.
Then comes the extremely tricky and difficult insurance claiming process which would be further complicated if you do not own the vehicle. It raises the chances of insurance fraud, and it is better for insurance companies to not allow it at all.
But there are many instances where you might not be the owner of the car but still would need insurance to drive it. The most common being driving your parents or spouse’s car. Or perhaps driving someone else’s car who cannot drive it anymore. Luckily many other options would secure the car with your insurance, and the insurance claiming process would not be complicated as well.
Here are some other ways of getting a car insured if you do not own it,
Other Insurance Options
The best way to get insurance, in this case, would be by becoming the co-owner of the car. You can ask the owner to get your name registered as the owner of the car. This makes the insurance company know that the car is an insurable interest to you and you can get it insured without any problems. The process of becoming the co-owner is also easy (and fast if you are lucky at the DMV).
This can work the other way around too. Instead of becoming the co-owner of the car, you can add the owner of the car to your insurance policy. This would work the same way, as insurance companies will have someone to whom the car is an insurable interest. These two methods would be perfect if you drive your spouse’s car or vice versa.
For people who drive for someone else, like a grandparent or someone who is too old to drive, being added as the driver in their auto insurance policy would be the best option. For any other option, you can contact your car insurance company (or the insurance company of the owner) and find ways to make the car your insurable interest. Different insurance companies have different policies. So it is always better to ask them first.
Non-owner insurance policy is another option for people who rent a car, or use someone else’s car but don’t own one. Or maybe if they have their license suspended for some traffic violations. Non-owner insurance policy is a great option for this car but knows that it only provides liability coverage. And it won’t be any low-cost minimum liability coverage, bur rather expensive one. So if you get in an accident with this insurance policy, you’ll have to pay for the repairs of your car from your pockets