Can someone else carry insurance on my car?
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UPDATED: Jan 25, 2016
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When shopping for auto insurance, it’s easy to be overwhelmed by all the options. Many people are also surprised by the fees when they move to a new state, upgrade their car or buy insurance on their own for the first time. There are several ways to save on the auto insurance, and you may be wondering if it’s an option to have a car that you own insured in someone else’s name.
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While this makes it easier for parents to pay the insurance bill for an adult child or to have a significant other pick up the cost, it may not be allowed by your insurance company. In fact, most companies want to know who the regular driver will be, and they won’t allow a person in one household to carry the coverage for someone who lives at a different address.
No Set Cutoff Age for Adult Children
In many cases, the law dictates when children must start taking responsibilities for their own actions or covering their own expenses.
While children can legally remain on your health insurance until age 26, there is no set cut-off age for how long you can insure your child’s vehicle.
In fact, your insurance company will probably want the information on all drivers in the household so that they can set appropriate rate levels. This is because everyone in the household has access to the cars and could borrow on at any time. It’s important to note that this only applies to the vehicles you personally own or lease and have an insurance interest in.
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Understanding Insurable Interest
This is important because insurance interest is what dictates who will carry coverage on a car. It’s defined as the economic loss that a person would suffer as the result of an accident involving the car. If you don’t pay the note on the car and your name is not on the title, then you have no insurance interest in the vehicle. In this situation, most insurance companies will insist that the owner of the car obtain their own policy for the vehicle in question, even if they live in the same household as you.
Protecting the Company’s Interest
Every insurance company bases their rates on a range of factors, including the value of the car, the owner’s driving history, location and the annual mileage. If the insurance companies allowed one person to insure a vehicle owned by another individual, then they may not have all the pertinent information required to set an appropriate rate. Insurance companies are concerned that people might:
- Insure a vehicle for someone with a poor driving record to hide the true risk
- Potentially damage a vehicle because they have no insurable interest in it
- Allow a resident in a higher cost area to have their vehicle covered at the lower rates available in another market
Insurers Will Find Out
It’s important to remember that your insurance provider is not completely dependent on you for getting the information they need. Insurance companies have a range of tools at their disposal to discover if there are hidden household members who have access to the car but aren’t listed on the policy.
If you allow an adult child to take your car to another state, then you need to have an open conversation with your carrier because of the changing risk levels.
Selling a car to a child or other adult but still carrying the insurance on it can also carry problems. If the insurance company discovers that you’ve lied to them, then they have a few legal options open to them, including:
- Refusing to pay claims
- Paying the claim but having the customer make back payments for the premium variances
- Cancelling the policy completely
- Pressing charges for insurance fraud
Protect your financial interests and stay on the right side of your insurance company by providing them with honest and accurate information. Having someone else insure your car so that you can obtain lower rates is considered a form of fraud, and it will catch up with you eventually. If you’re worried about the high cost of insurance, then consider taking other steps to bring the cost down, including higher deductibles and asking for discounts. If you don’t want to pay for other drivers in the household, then you may be able to sign up for special policies that allow you to exclude those individuals. Simply taking the time to shop around for rates can help you find more attractive prices, but you’ll need to have your own policy if your name is on the title of a car. Start comparing car insurance rates now by entering your zip code in our FREE tool below!