Can you insure a car that is not in your name?

Can you insure a car you don’t own? The short answer is yes, but not without difficulty.

In theory, it should be easy, as you simply tell the insurance company that you’re not the owner when you apply. In practice, however, the process can be a little frustrating.

The problem is that most car insurance companies are generally reluctant to insure someone who isn’t the owner of the car. This is due to something called insurable interest, which forms the basis of all insurance contracts. Continue reading to find out what it takes to insure a car that you don’t own.

Insurable Interest Explained

The basic assumption behind insurable interest is that if you obtain car insurance for your own vehicle, you have a vested interest in its well-being. The majority of car owners wouldn’t want to damage their vehicle because of the repair costs and the risk of losing a substantial investment. Furthermore, insurers only want to insure drivers who have obvious reasons for using and caring for a vehicle.

But for an insurance company, all this intrinsic motivation to keep your car accident-free is gone when you’re not the owner. In their eyes, the car simply isn’t important to you. After all, it won’t matter if you total a car that you don’t own.

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How to Insure a Car You Don’t Own

In order to obtain insurance for a car you don’t own, you’ll need to convince insurance companies of your involvement in the car’s ownership. It is up to you to demonstrate that you are just as invested in the car as the owner is.

Here are some ways to acquire insurance for a car you don’t own:

• Add the owner to your policy as an additional interest
• Get added to the owner’s policy
• Get a non-owners insurance policy
• Add your name to the car’s registration

The effectiveness of each method varies depending on your situation. We’ll review all the available options, so that you can choose the one that best fits your needs.

Include the Owner in Your Policy as an Additional Interest

If you already have an existing insurance policy in your name, simply add the owner of the vehicle as an additional interest. Vehicle owners added as additional interests still retain ownership of their vehicles, even if they are not the primary drivers. (For more information, read our “Auto-Owners Car Insurance Review“).

As opposed to adding another covered driver, this will not affect your insurance rates. It merely indicates that another party has an insurable interest. We recommend this option if the vehicle is in your possession more than the owner’s and you need regular access to it.

Just remember that, in order for the owner to drive the vehicle, they will still need to obtain their own insurance as they are not covered by your policy.

Add Yourself to the Owner’s Policy

Additionally, you can add yourself as a named driver to the original owner’s insurance policy. You’ll be able to do this easily if you live in the same house as the owner. However, expect increased insurance rates, though it is still generally more affordable than having separate policies for each driver.

If you do not live with the owner, your insurer may be less willing to give you some wiggle room in regard to adding names to the policy. In this situation, as mentioned above, you will need to prove that you have a financial interest in the car.

For example, you might say that you need to use a vehicle to commute to work but cannot afford your own car. This is a perfectly valid reason.

Just remember to be honest. Getting caught lying to your insurance provider can lead to rate increases, policy rejections, and fines.

Get a Non-Owner Insurance Policy

Some companies offer special insurance policies that allow you to insure a car that’s not yours. We call these non-owner policies. 

Non-owner car insurance is for people who don’t own a car but occasionally drive someone else’s. This type of insurance provides liability coverage for you, but the vehicle itself still has to be insured by the owner.

Non-owner insurance is best if you regularly borrow cars from family or friends. It’s also a suitable option if you regularly rent cars or use car-sharing services. This type of coverage is designed to complement the owner’s existing policy rather than replace it, so it can be purchased whenever needed.

Rates for non-owner auto insurance tend to be between 5% and 15% lower than standard policies. However, if you drive a borrowed or rented car only a few times a month, the savings may not be noticeable. On the other hand, if you will be driving the car often, it makes sense to add yourself to the owner’s policy instead (see the previous method).

Most of the major car insurance companies offer non-owner car insurance, so if you want to insure a car you don’t own with State Farm, Geico, or Allstate, for instance, you have the option. Progressive will also insure a car that is not in your name if you buy non-owner car insurance.

Add Your Name to the Car’s Registration

A co-owner agreement is another simple way to prove that you have an insurable interest in a car that you don’t own by directly sharing ownership of it. To register yourself as a co-owner of a vehicle, speak to the owner about obtaining a new registration. Otherwise, if the car is intended as a gift, have the owner directly transfer the registration to you.

Both of these processes must be done at your state’s Department of Motor Vehicles (DMV) and will require a new registration for the vehicle. (For more information, read our “Does your car insurance and registration have to be under the same name?“).

In any case, once your name appears on the title of the car, acquiring insurance for that vehicle won’t be difficult. However, keep in mind that you’re technically insuring your own vehicle at this point.

Regardless, in the event that you decide to pursue this route, here are a few other situations to consider:

• It can be challenging to obtain co-ownership of a vehicle in certain circumstances, such as when the vehicle has yet to be fully paid off
• You can acquire a co-owner even if you don’t live together
• State regulations may vary regarding transferring or altering registrations

Are there any legal restrictions?

New York is the only state in the U.S. that requires that the name on the insurance card match the name on the vehicle’s registration. 

This indicates that a driver in New York cannot obtain insurance for a car they do not own. The state does, however, allow co-ownership. So, as long as you are listed as a co-owner on the vehicle’s registration, you can still go ahead and purchase coverage for your vehicle.

You can insure a car you don’t own in Texas, Florida, and all other states in the ways stipulated above.

 

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