There are many reasons why you may be driving a car that you don’t own. Perhaps your car is inoperable and you need to borrow a vehicle from a family member or friend. Perhaps someone gave you a car, and they registered it in your name. You may wonder if you have the right to insure the vehicle you drive, even though you don’t own it. You cannot insure a vehicle you don’t own.
Is it possible to insure a vehicle without having the title in your name?
You cannot generally insure a vehicle you don’t own. Understanding how insurance works is key to understanding this answer.
Insurable interest
Insurance is a financial product. Your insurance doesn’t prevent damage from occurring, even though you “cover” your vehicle. Auto insurance provides financial protection, covering the costs of any claims if you are in an accident.
Because auto insurance will pay for damage that you cause or damage to your own vehicle (depending on the type of coverage you have), you must have what is called insurable interest in the vehicle. You must also have financial ownership of the vehicle you are insuring. You cannot insure a vehicle that isn’t registered to you if it’s not registered to your name.
Auto insurance claims
Funds disbursed by an insurer to cover the vehicle’s damages are paid to the policyholder when an auto insurance claim has been paid. You could be eligible to receive money for vehicle damage if you are allowed to insure a car that you don’t own.
It’s like borrowing a friend’s car to hit a pole. You could file a claim under collision insurance to be reimbursed for damage. This would even if you weren’t able to insure your car. Your friend paid for it. You do not have any financial stake in the car and therefore cannot claim compensation from the insurer.
Non-owned vehicles are eligible for insurance
We have now explained why you cannot insure a car not in your name. Let’s talk about some situations in which you might need auto insurance for a vehicle you don’t own. And what you can do to get it.
You can rent a car
There are a number of options available for auto insurance coverage if you rent a vehicle. Your coverage limits on an auto policy for another vehicle will often transfer to your rental car. Your rental car will not be covered for damage if it is not covered by full coverage auto insurance. The vehicle could also be vandalized or stolen.
You should consider purchasing the insurance provided by the rental company if you rent a car and do not have insurance on another vehicle. If you are unable to show proof of insurance coverage for another vehicle, you might be required by the rental company to purchase the coverage before renting the vehicle.
Borrowing a car to a friend or family member
Ask a friend or family member to contact their insurance company before you drive a vehicle loaned to your. You will generally be covered under their auto insurance policy, even if the vehicle is not used as a regular driver. This is known as “permissive usage”: The vehicle owner and the insurer allow you to temporarily drive the vehicle, so your insurance coverage will extend while you are using the vehicle.
You may need to list yourself as a driver if you borrow a car for a long time. To ensure that the policy is correctly rated, it may be necessary to update the vehicle’s garaging address to your address. You should not borrow a car regularly — the definition will vary from one company to another — and you must notify your insurance company to avoid a misrepresentation. This could lead to a denied claim.
As a gift, a vehicle can be given to you
Maybe your grandparents or parents just bought a new car, and are willing to give you their old vehicle. You might be offered to insure the vehicle, but is this the right way to deal with the situation?
It all depends on your age and living conditions. If you live with your parents or the person who gave you the car, and are still a minor, your parents may allow you to keep the vehicle covered under their policy. You can also add yourself as the owner of the vehicle.
If you’re 18 years old or reside in another location, you may need your own auto insurance policy. Insurance companies understand that vehicle registrations and insurance changes don’t happen overnight. Therefore, it might be okay to leave the vehicle insured under the policy of the previous owner for a few weeks. You should try to obtain insurance on your vehicle as soon as you can and register the vehicle and transfer the title to you.
Company cars
You might wonder if you should purchase auto insurance if your employer has provided you with a vehicle. Your employer is the usual owner of the vehicle. This means that you do not have any insurable interests in it. As a driver, you will be added to the company’s auto insurance policy. You cannot, and are not allowed, to purchase a personal policy for an auto policy that covers a vehicle you don’t own.
If you have a business that owns a vehicle, then you need to get business auto insurance. You will need to insure the vehicle as a business automobile and not as a personal one. The insurance policy must be registered in the name of your company if the vehicle is owned by your business.
Questions frequently asked
What if I don’t own a car but need insurance?
If you don’t own a vehicle, legally you are not required to purchase auto insurance. However, if you frequently rent cars or drive someone else’s car, it may be a good idea to buy a non-owner policy. These policies are also known as named-operator policies and provide some coverages for you as a driver, without having to insure a car. These policies usually include liability coverage, but they may also cover you for medical payments and/or personal injuries (PIP), along with uninsured or underinsured motorist coverage.
Which is the best auto insurance company?
The best car insurance company for you will depend on your specific situation and rating factors. The best auto insurance company for you will depend on your age, gender and credit history.
What is the cost of car insurance?
The average cost of full coverage car insurance in the U.S. is $1,674 per year. The amount you pay will also depend on the same factors that helped you choose the best company for you. You might find the best coverage for you by getting quotes from multiple companies.