Car insurance providers typically prioritize vehicle owners in case of an accident, and it is usually not possible to insure someone else’s car unless there can be proof of an insurable interest.
In general, this means either being related to or living in the same household as its owner; however, other options exist as well.
Legality
Most people do not hesitate to borrow or drive the vehicle of a friend or family member without hesitation, even though doing so is not illegal. While borrowing someone else’s vehicle is legal, it is essential that all parties involved know who will be held liable if an accident should arise and which policy holds responsibility in case it does happen. Sometimes it might even make sense for them to add your name onto their insurance policy as part of a rental agreement agreement.
Major auto insurers do not sell policies to cover vehicles you do not own, as this would indicate fraud. You can avoid this problem by becoming co-owner or showing that there is another financial stake in the car such as being related or living with its current owner.
Insurance may be available for vehicles you don’t own if they are financed through a lender and the loan or debt remains in your name. As evidence of having financial stake in them, being added as joint owner to title or depending on it for transportation can show this. Unfortunately, this situation requires significant paperwork and approval by insurer before filing claims with them; additionally they may charge higher premiums depending on your circumstances if this option is chosen. If this route is chosen however, ensure the vehicle is fully paid-for before filing with them as claims will likely result in claims being rejected as claims could potentially arise from filing them!
Insurance Issues
If you have a financial stake or insurable interest in the car, it may be possible for it to remain insured even though it’s technically not yours legally. This might happen, for instance, when extended family members living with you use it regularly, or if someone moving in needs one while their own vehicle is being repaired – though the specifics will depend on its current insurance policy, state regulations and the provider.
In most instances, vehicle owners will allow you to be listed as an authorized driver on their policy. This typically allows you to drive their car as long as they permit it – this option may be especially beneficial to friends and family who frequently borrow vehicles for work, school or personal purposes. It would be illegal if the owner restricted your access.
However, if you only plan on using your vehicle occasionally, adding yourself as a driver might not be worthwhile. Your insurer must assess risk before determining whether they have sufficient coverage. In certain situations, vehicle owners may elect not to include you if they perceive too great of a risk to their investment, especially if you have multiple driving offenses or DUI history.
Some drivers opt to purchase non-owner car insurance themselves. Although more costly, this approach provides more comprehensive coverage and may be the better option in certain circumstances. Such policies typically cover liability as well as PIP, medical payments and uninsured motorist coverage – though insurers can be wary of such policies due to concerns of fraud.
Liability Issues
Though it is perfectly legal to loan someone your car and insure it under their name, liability issues may arise if a crash happens at your fault. Drivers involved could look towards you for compensation and prove negligence on your part for financial gain; most people tend to be generous when helping friends and family members and lending a car is often not seen as negligent behavior.
If you give someone else permission to use your vehicle and they get into an accident, they might claim you didn’t give them the green light – leaving you exposed for potential unpaid damages depending on the situation and insurance policy language. Without evidence to the contrary, it can be challenging proving this fact – this could leave you open to unpaid damages in some situations and may force unneeded insurance premium payments on you unless evidence can be produced to prove this consent was given in writing.
An effective way to avoid these situations is to be named either as an insured on the policy or listed as a permissive user, thus protecting you from claims made against drivers involved in accidents and ensuring they’re covered should an accident happen. You could also consider purchasing a non-owner policy designed especially for occasional drivers of other people’s cars.
Purchasing this type of policy can be more expensive, and may not cover all aspects of the car. Before signing any contracts or making payments, be aware of exactly what coverage exists, since some policies exclude items like business uses.
Overall, the most reliable option is being candid with those you wish to lend your car and asking them for their own vehicle insurance policy. Forming a good relationship and knowing they can be trusted makes this easier; also limit how often they use your car as this will keep it in better shape.
Options
As a general rule, major insurance providers do not permit someone who does not own their car to insure it under their policy. This is because insurers require policyholders have an “insurable interest” in protecting it – without this motivation to maintain and care for it properly, there would be little motivation for maintenance and could result in poor maintenance or damage of said car. There are however workarounds for this rule that allow you to maintain such vehicles insured by someone else.
One strategy to add yourself as an additional interest on an owner’s policy can be challenging if your car is still covered by loans; however, this option should usually work if your vehicle has been paid off and you live with its current owner.
Another option available from certain companies is purchasing a non-owner policy, which offers coverage if you borrow or use someone else’s vehicle regularly without owning it yourself. Such policies provide peace of mind if an accident should arise when renting or borrowing cars regularly from others.
Add yourself as a driver or co-signer on the owner’s policy as another solution; often this is much simpler than proving insurable interest as they will likely trust that you drive their car responsibly. But adding yourself could increase your rates.
Note that most often when insuring a vehicle that you don’t own for financial reasons. If there’s another reason you want to insure a vehicle that doesn’t belong to you, talk with your insurance provider and discuss all available options. Mark Fitzpatrick has spent over five years conducting original research and creating tailored content designed to give consumers confidence about their money decisions. He currently leads P&C insurance content production at MoneyGeek and has been quoted in several insurance publications.