Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: May 31, 2019

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Important facts to know...

  • Buying or selling vehicles requires transferring insurance from the buyer to the seller
  • Auto policies cannot be transferred between two people
  • Adding or removing vehicles requires some basic information

Car insurance is necessary for every vehicle and driver on the road, so transferring coverage on vehicles is an important process to understand.

There are some general insurance principles that the NAIC outlines that are necessary to review to fully understand how it works.

Compare car insurance quotes today and see if you could be saving on the coverage you need.

Insurance Basics

Insurance is compulsory for all vehicles on the road. Purchasing a vehicle from a friend or dealer requires you to prove your financial responsibility, which is good for you since you won’t have to worry about crippling debt should you be involved in an accident.

It’s not an option to bypass purchasing or transferring coverage.

Next, insurance companies base the premium charge on the following:

  • your personal information
  • your driving history
  • your chosen coverage

Age, prior accidents, the year model of your vehicle, and the deductible are all factors that determine your premium. Therefore, adding a driver to your policy, reducing your deductible, or getting into an accident can all increase your rates.

Finally, the insurance policy is a contract between you and the insurance company. The insurer agrees to provide coverage for your vehicle in exchange for a premium and a promise that all the information you have provided to them is true and accurate.

It is for this reason that you cannot simply transfer a policy from your name to someone else’s. In fact, most, if not all, auto policies contain language stating that the policy cannot be transferred to anyone without the insurer’s permission.

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Buying or Selling a Car

There are two parties involved in the transaction, the buyer and the seller, who each have different responsibilities in the sale.

The seller should already have the vehicle listed on his policy. For dealerships, this is with their business insurer, and for friends or individual owners, with their personal auto insurer.

  • The seller should have all documents prepared to complete the transfer of ownership
  • The buyer should have the necessary documents ready to send if required

It might seem easy for the seller to transfer ownership of the vehicle along with the insurance that covers it, but, as explained above, this does not work for several reasons. Most importantly, the owner of a vehicle and the insurance company must choose each other freely.

What if the new owner doesn’t think they have the best deal on their premium and wants to compare? What if the auto insurance company doesn’t want to insure the new owner, who has several drunk driving violations on his record?

Once the sale is complete, the seller merely has to contact his agent or insurer and request that the vehicle is removed from his policy.

Some companies may require the bill of sale, so make sure to have that available if needed. If this is the only auto listed, your policy may cancel and you will receive a refund for any premium you are owed.

For buyers, the easiest and safest way to get insurance for your new vehicle is to contact your insurer or agent before you finalize the sale. That way, if they require any special information you are prepared and can complete the transfer process stress-free.

  • Make sure you have all necessary documents, including the VIN, bill of sale, and title
  • Decide what coverage you want on your new vehicle — liability, physical damage, rental, etc.

If you don’t have an auto policy, research and compare the best options for your needs. There are many insurance companies fighting to provide you with a quote, so make sure that you get the best bang for your buck.

If this is your second vehicle or you are upgrading to a new auto, congratulations! Adding this new vehicle to your policy is easier than researching and purchasing one in the first place.

Contact your agent or call your insurance company directly. Let them know that you just purchased a vehicle and want to add it to your policy.

They will ask for the required information (the date that you purchased the vehicle, the VIN, what coverage you would like, etc.) and let you know what documents, if any, that you will need to send them to add this to your policy.

If you’re replacing one of the vehicles, let your agent or the representative know and they will make the switch.

While you’re taking care of this, it’s a good idea to confirm the coverage that you have. Make sure you are okay with the deductibles and see if there is anything you would like to add — or maybe no longer even need — now that you have a new vehicle.

This is another reason that insurance cannot be transferred between owners. You must choose the coverage that you would like, from liability limits, to damage deductibles, to rental coverage, about which the prior owner may have different ideas.

Things to Remember

When you buy or sell a vehicle, you have to deal with insurance companies, so make sure to have all the information necessary to streamline the process. Auto insurance policies cannot be transferred to new owners for multiple reasons:

  • The insurance policy is a contract between you and the insurance company and is specifically priced and offered to you based on your information.
  • You deserve the opportunity to compare and choose the insurance company and coverage that best fits your needs, rather than take a company, or a price, that you might not like.

Insurance decisions are personal and differ by person, so make sure that you are making the most informed decision for yourself. While policies cannot transfer between two different people, vehicles can easily be added and removed from policies.

Compare car insurance quotes for free right now. Just enter your zip code into our free rate tool to get started.