Auto Insurance: Owner's Name Essential?

In most U.S. states, it is possible to have car insurance and registration under different names. However, insurance companies may refuse to provide insurance for a vehicle without putting the registered owner on the policy. This is because the primary policyholder needs to have what is called 'insurable interest' in the car they are insuring. In other words, they must have a financial stake in the vehicle.

If you are unable to insure a car that is not in your name, there are alternative options. One option is to co-title the car and add yourself as an owner. Another option is to get non-owner insurance, which will cover you for liability while driving a car that isn't yours.

Insurable interest

If you own the vehicle, you have insurable interest because the car is your investment, and you have a stake in keeping it from being damaged or destroyed. Therefore, the titled owner of a car needs to be the one to insure it.

In most cases, you cannot insure a vehicle that you do not own. This is because you do not have insurable interest in the car, and so you cannot prove that you have a financial stake in it. However, there are some exceptions and alternative options.

One option is to co-title the car, which means adding your name as a partial owner to the car's title. This can be done by jointly applying for a new title with the current owner, although the specific requirements for this process vary by state. Once you are a co-owner, you can be added as a named insured on the auto policy.

Another option is to get non-owner insurance, which will cover you for liability while driving a car that isn't yours. This type of insurance is ideal for those who frequently rent or borrow cars, as it provides a basic level of coverage without including protection for the vehicle itself.

In some states, it is also possible to register and insure a vehicle under different names. However, this may confuse the insurer and affect the payment of settlements to insured drivers. Additionally, some insurance companies may refuse to underwrite a policy for a person whose name is not on the vehicle's registration.

Overall, while it may be possible to insure a car that is not in your name, it is generally more difficult and may require additional steps such as co-titling the vehicle or obtaining non-owner insurance.

Non-owner insurance

In most cases, you can only insure a car that you own. This is because car insurance companies want to ensure that the primary policyholder has what is called 'insurable interest' in the car they are insuring. Insurable interest means that you have a reason to insure a car, and if you are the owner, the reason is clear: the car is your investment, so you have a stake in keeping it from being damaged or destroyed.

However, there are some options for those who want to insure a car that they do not own. One option is to co-title the car and add yourself as an owner. Each state's Department of Motor Vehicles (DMV) has specific requirements for doing this, but it usually involves filling out a form with the names and information of both drivers, paying a fee, and going to the DMV in person to sign the new title.

Another option is to add a named insured to an auto policy. If you live with someone and frequently drive their vehicle, the insurance company may require you to be added as a named insured on their policy.

A third option is to purchase a non-owner insurance policy. This type of policy provides liability coverage for bodily injury and property damage, meaning that it will cover you if you are liable for damages or injuries in an accident. Non-owner insurance is typically cheaper than standard insurance policies and is ideal for those who frequently rent or borrow cars. It is also a good option for those who are in between cars or cannot afford to buy a car but still need to drive. Non-owner insurance can also help fill in gaps in coverage if the car owner's insurance policy has low liability limits.

In addition to liability coverage, a non-owner insurance policy may also include medical payments and/or personal injury protection, as well as uninsured or underinsured motorist insurance coverage. However, it is important to note that non-owner insurance does not cover damage to the vehicle you are driving or your own injuries after an accident.

While most states allow residents to register and insure their vehicles under different names, it is important to be aware of the potential disadvantages. Having the registration and insurance in different names can confuse the insurer and affect the payment of settlements to insured drivers. Additionally, insurance providers may deny coverage if the car registration doesn't match your name, and having different names on the documents may cause problems when filing a claim.

Adding a named insured to an auto policy

Who Can Be a Named Insured?

A named insured is typically the individual who owns or leases the insured vehicle. However, policies can have more than one named insured, such as a spouse or co-owner of the vehicle. In most cases, the named insured has control over the policy and is authorised to make changes.

Rights and Responsibilities of a Named Insured

The named insured has the broadest protection and indemnity under the policy. They are responsible for choosing coverage types and amounts, receiving premium notices, and assuming payment of premiums. They will also receive notices of cancellation and be held responsible for reporting claims and occurrences to the insurer.

Adding a Named Insured to a Policy

To add a named insured to an auto policy, you can either do it online or over the phone, depending on the insurance company. It is a simple process, but it ensures that the additional person is covered by the policy and has the same rights as the primary named insured.

Advantages of Adding a Named Insured

Adding a named insured can be beneficial in several scenarios. For example, if you live with someone and frequently drive their vehicle, insurance companies may require you to be added as a named insured on their policy. It also helps in cases where you want to insure a family member or friend who is the primary driver of your car.

Disadvantages and Complications

While having multiple named insureds can provide coverage for all drivers, it may also complicate the claims process. Insurance companies may be confused about whom to pay the settlement to, especially if the names on the registration and insurance policy differ. This can cause delays in the claims process and affect settlement payments.

In conclusion, adding a named insured to an auto policy is a straightforward process, but it's important to understand the rights and responsibilities of a named insured and be aware of any potential complications that may arise, especially during the claims process.

Co-titling a car

A car title is a legal document issued by the state government that proves who owns the vehicle. It is required to buy or sell a vehicle and is separate from vehicle registration and proof of insurance. The title includes information such as the vehicle identification number (VIN), make, model, year, and colour, as well as the owner's name and address.

Once you are added to the title as a co-owner, you are free to get an insurance policy for that vehicle. As an owner, you can be the primary policyholder, but any other owners should also be listed on the car insurance policy.

While most states allow residents to register and insure vehicles under different names, having separate names for the registration and insurance may confuse the insurer and cause complications during the claims process. Therefore, it is recommended to have multiple names on both the registration and insurance, especially if you are co-titling a car.

State-specific requirements

While most states allow residents to register and insure vehicles under different names, there are some state-specific requirements to be aware of when it comes to auto insurance. Here are the details:

New York

New York is the only state that requires the insurance card and registration to be in the same name. If a driver uses two names on their vehicle's registration, both names must appear on the car's insurance policy.

No-Fault States

Some states, including Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah, are considered no-fault states. In these states, drivers are required to file bodily injury claims with their own insurance companies through Personal Injury Protection (PIP) coverage. However, some no-fault states allow drivers to opt out of this requirement.

States That Don't Require Car Insurance

New Hampshire and Virginia are the only two states that don't mandate car insurance. However, drivers in these states are still financially responsible for any bodily injury or property damage they cause in an accident. In Virginia, drivers can choose to pay an annual $500 uninsured motorist fee instead of purchasing insurance, but this provides no coverage in the event of an accident.

State Minimum Requirements

While each state has different minimum insurance requirements, nearly all states require a minimum amount of liability insurance to cover injuries or damages caused in an accident. About half of the states require Uninsured/Underinsured Motorist (UM/UIM) coverage, and a few mandate Personal Injury Protection (PIP) or Medical Payments coverage. Comprehensive and collision coverage are always optional but are recommended for additional protection.

Frequently asked questions