Can I Buy Insurance for a Car I Don't Own
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For the most part, car insurance policies cover vehicles that are owned by the person who owns the policy. There are exceptions, however, in which someone can get a policy for a car they do not own. "Can I insure a car I don't own?" you may ask. Learn about the process behind insuring a car that's not your own and why you may want to do so.
Importance of Insurable Interest
The first thing insurers look for when you apply for a policy is insurable interest, according to ValuePenguin. This is essentially the motivation you have for wanting insurance in the first place. In most cases, owning the vehicle qualifies as insurable interest, but failing that, you'll have to show your interest in another way.
Without insurable interest, there's no clear incentive for you to keep the car in good condition. Remember, insurance companies only want to insure drivers who don't pose that much risk, so if you don't have a clear interest in keeping the vehicle in good condition, they often won't bother making a policy for you. Not having insurable interest but wanting coverage anyway is a common tactic used for insurance fraud, so it's seen as a red flag by insurance companies.
Preventative State Laws
There are some situations in which it's impossible to get insurance on a vehicle that you don't actually own. Among the most common are those defined by state laws. In New York, for example, you cannot insure a car you don't own because the name on your insurance card must be an exact match to the name on the registration. The actual owner of the vehicle would be responsible for providing insurance that would, ideally, cover damages caused by other drivers as well. If damages exceed the owner's liability coverage, however, you'll be responsible for the rest out of pocket.
How to Insure a Car You Don't Own
If you're looking to insure a car you don't own, the process is fairly straightforward. Here are some of the best ways to get insurance for a car that's not registered to you:
- State an additional interest: You can add the owner of the vehicle to your own insurance policy as an additional interest. This is the easiest and most common way to get insurance for a vehicle that isn't yours. Keep in mind that this won't raise insurance costs; it just states additional insurable interest on the part of another party.
- Use the owner's policy: You can add yourself to the owner's insurance policy. This is most commonly done when the owner of the car and the policy live in the same residence as you. Just keep in mind that the ZIP code of the residency and the ZIP code of where the car spends most of its time have a major impact on insurance rates. Additionally, adding yourself to the policy will increase the premium no matter what, according to The Zebra.
- Purchase a non-owner's policy: There are special insurance policies available in some areas from companies that cover this particular scenario. Just note that it can't take the place of the owner's required insurance policy. Instead, it functions as a complement to the vehicle's primary policy.
- Add your name to the title: Putting your name on the title is a great way to demonstrate insurable interest to insurance companies. This can be tough if the title is still covered by a loan, but if the vehicle is paid off, all that's required is a bit of paperwork. Loans are tending to get longer, however, so this strategy may be tricky.
- Demonstrate need: The more-difficult method of proving insurable interest is demonstrating need. While not as simple as putting your name on the title, you can still make a case to an insurance company if you'll be driving the car often. Typically, need can be demonstrated if you require the car to commute to work, you can't afford your own car, and there are no practical public transportation options.
Non-Owner Insurance Coverage
Non-owner insurance has a different array of coverage options than standard insurance. For the most part, it focuses on liability coverage for injury and property damage. Medical payment coverage and uninsured motorist coverage may also be available in some circumstances as well, but it's not very common. When you're involved in an accident, the owner's coverage will take effect first, and your non-owner insurance coverage will cover the rest, assuming it doesn't exceed your liability limit.
Because there's no owned vehicle attached to the policy, comprehensive and collision coverage are unavailable. Roadside assistance reimbursement for expenses like towing is unavailable as well. While this coverage may extend to rented vehicles, that's not an assumption you should make by default. Always check to see whether the policy extends to rented vehicles first.
When You Need Non-Owner Insurance
There are several instances in which you'd want to get non-owner insurance coverage if possible to avoid the chance of serious out-of-pocket payments in the future. This is especially important if the car in question has active safety features. The circumstances are as follows:
- Following state regulations: In some states, you're required to have insurance in order to reinstate a driver's license. This is most commonly referred to as the proof of financial responsibility law, and it's especially important if you're trying to get your license back after a serious conviction like a DUI.
- Using a car-sharing service: If you use a car-sharing service, non-owner policies serve to supplement the liability coverage provided by the service. The provided coverage may not have enough liability coverage for all the damages, so having your own policy can save you money in the end.
- Maintaining continuous coverage: A lapse in coverage makes you look risky to insurers, so keeping some kind of insurance in your name at all times can prevent this risk.
- Borrowing cars: If you borrow someone else's car fairly often, it's always best to have your own insurance policy attached to theirs. That way, you're potentially covered even if the damages from an accident exceed their coverage limits.
With these circumstances in mind, you can insure a car you don't own fairly easily. It's even less costly than a standard insurance policy, so it's always worth it to have the supplemental coverage.
Sources:
https://www.thezebra.com/auto-insurance/vehicles/insuring-car-you-dont-own/
https://www.valuepenguin.com/car-insurance-car-not-registered-to-you
https://www.caranddriver.com/news/a24233073/active-safety-repair-costs/
https://www.caranddriver.com/news/a29338445/auto-loans-expensive-longer/
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Can I Buy Insurance for a Car I Don't Own
Source: https://www.caranddriver.com/car-insurance/a31986020/can-i-insure-a-car-i-don-t-own/