While you might think that the insurance company wouldn’t mind who pays for the insurance on any given vehicle, it can be tricky if you want to insure vehicles that you don’t own. The issue is that most car insurance providers are typically reluctant to insure someone who isn’t the vehicle owner. This is because of a concept known as insurable interest, which is the basis of all insurance contracts.
Definition: A person or entity has an insurable interest in an item, event, or action when the damage or loss of the object would cause a financial loss or other hardships. The assumption is that if you insure a vehicle you own, you have a vested interest in taking care of the car. Therefore, insurers only want to insure motorists who have apparent reasons for utilizing and caring for the vehicle. But in the eyes of the insurance company, the motivation to keep a vehicle car accident-free doesn’t exist when you’re not the owner.
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How to Insure Vehicles That Belong to Someone Else
To obtain an insurance policy for a vehicle owned by someone else, an individual will have to explain the nature of their involvement to the insurance company; that is, why they are just as invested in the vehicle as the owner is. You can typically work through these explanations with the help of your insurance agent or broker.
To acquire insurance for a vehicle you don’t own, there are several actions you can take:
- Add the owner to your policy as an additional interest
- Get added to the owner’s policy
- Obtain a non-owners insurance policy
- Add your name to the car’s registration
Let’s take a look at each of these.
Include the Owner as an Additional Interest: If you already have an insurance policy in your name, add the car owner as an additional interest. Car owners added as additional interests still own their vehicles, even if they are not the primary drivers. Instead of adding another driver to your policy, this option will not impact your insurance rates. It simply indicates that another party has an insurable interest. This is generally the appropriate option if the car is in your possession more than the owner’s and you require frequent access to it.
Add Yourself to the Owner’s Policy: Another option is to add yourself as a named driver to the original owner’s insurance policy. This is easy if you live in the same residence. However, insurance rates are likely to increase. If you do not live with the owner, the insurance company may be unwilling to give you the ability to add names to the policy. In this situation, you will be required to prove a financial interest in the vehicle. One of the most common reasons is needing a car to get to work but cannot afford your own vehicle.
Obtain a Non-Owner Insurance Policy: Some companies offer special insurance coverage that permits an individual to insure a car that doesn’t belong to them, known as non-owner policies. Non-owner insurance policies are for those who don’t own a vehicle but occasionally drive someone else’s car. This type of insurance provides liability coverage, but the car itself still must be insured by the owner. This is likely your most appropriate choice if you routinely borrow cars from family or friends or regularly rent cars.
Add Your Name to the Car’s Registration: A co-owner agreement is another easy method to prove that you have an insurable interest in a vehicle that you don’t own – by directly sharing ownership of it. To register yourself as a co-owner of a vehicle, you will need to work through the Department of Motor Vehicles (DMV). Once your name appears on the title of the car, acquiring insurance for that vehicle won’t be hard. However, you are technically insuring your own car with this option.
If you have further questions, call the insurance experts at Anderson & Associates Insurance Group. We are your local Sarasota and Manatee insurance professionals.
