Auto Insurance Transferability: Who Is Covered?

Auto insurance can be transferred to another person in certain circumstances. While car insurance policies typically follow the car and not the person, there are situations where a transfer of insurance from one person to another is necessary. For example, when selling a car, the insurance policy needs to be transferred to the new owner to ensure continuous coverage. This process involves updating ownership information and providing the necessary documentation to the insurance company and relevant authorities, such as the Department of Motor Vehicles.

It's important to note that the transfer of insurance may also depend on the specific insurance company and their policies. Some companies may only allow transfers between spouses, while others may offer more flexibility. Additionally, there might be a grace period for transferring insurance to a new vehicle, which can vary from state to state.

Auto insurance can be transferred to a new car

When you buy a new car, you will need to get it insured before driving it. You may be unsure whether to transfer your current insurance to the new car or cancel your existing policy and start a new one. The main benefit of transferring your auto insurance to a new vehicle is that it saves you time and potentially money.

To transfer your insurance to a new car, you must inform your auto insurance company. Your insurer will help you assess your coverage needs during the transfer. You will need to provide the agent with:

• The year, make and model of the car
• The odometer reading
• The registration or title

Your agent will also compare your current coverage with the coverage you want on your new vehicle. In most cases, newer vehicles will cost a little more to insure than older ones. In addition, a different make and model might cost more to insure.

You will need to coordinate the dates so there’s no lapse, but you can accomplish this by allowing them to overlap by one day. Insurance companies typically allow drivers at least 30 days to update their policy and transfer their insurance to a new vehicle.

If you decide to keep your old car, you won’t be able to legally drive it without insurance. In some states, you may be required to surrender your plates and registration if insurance coverage lapses.

If you are selling your old car, it is crucial to inform your insurance provider so that they can update your policy and remove the sold vehicle from your coverage.

Temporary transfer of insurance is possible

Temporary transfer of auto insurance is possible in certain situations. For instance, if you cannot access your car and need to drive another vehicle for a short period, you can temporarily transfer your insurance to the borrowed vehicle. This could be when your car is at the mechanic's shop for repairs, or when you take your car to the garage for maintenance.

Some insurance companies will allow you to make this temporary transfer, as long as the vehicle does not belong to your employer or is not a lease. However, it is important to note that rental cars are typically fully insured by the rental company, so there is no need to transfer insurance in this case.

Additionally, there is usually a "grace period" of around 30 days when you get a new car, during which your insurance will temporarily cover your new vehicle while you finalise the transfer. This grace period can vary by state and insurance company, so it is important to contact your agent as soon as possible to initiate the transfer process.

To complete a temporary transfer, you will need to provide the agent with the year, make, and model of the car, the odometer reading, and the registration or title. They will then be able to compare your current coverage with the desired coverage for the new vehicle and make any necessary adjustments.

It is worth noting that insurance companies handle transfers differently, and while you can generally transfer coverage from one vehicle to another, transferring an insurance policy from one person to another is typically not allowed, except in cases where the policy covers two spouses, and one spouse passes away.

You need to inform the insurance company about the transfer

When it comes to auto insurance, it's essential to understand that the policy typically follows the car rather than the person. In most cases, your friend or family member can drive your car under your insurance policy without needing a transfer. However, there are situations where transferring your auto insurance to another person becomes necessary.

Informing the Insurance Company

If you're selling your car, transferring ownership, or dealing with a change of circumstances, it's crucial to inform your insurance company about the transfer. Here's a step-by-step guide to ensure a smooth process:

• Transfer of Ownership: Before contacting your insurance company, ensure you have completed the necessary steps to transfer ownership of the vehicle. This typically involves visiting your local Department of Motor Vehicles (DMV) and signing the relevant documents.
• Contact Your Insurance Company: Once ownership has been transferred, get in touch with your insurance provider. Let them know about the change in ownership and your intention to transfer the insurance policy to the new owner.
• Provide Necessary Information: The insurance company will require specific details about the new owner, such as their name, contact information, and driving history. Be prepared to answer questions about the new owner's age, driving record, and other factors that may impact the insurance rates.
• Complete the Paperwork: The insurance company will have a standard procedure for transferring insurance. They may require you to fill out forms, provide proof of the ownership transfer, and submit relevant documents. Ensure you follow their instructions carefully.
• Obtain Proof of Transfer: After initiating the transfer, request a document from your insurance company confirming the transfer of liability to the new owner. This document will be crucial for the new owner to certify their vehicle as legally drivable.
• Inform the DMV: Submit the transfer of liability document to your local DMV. This step is essential to ensure that the vehicle is legally recognised as being insured under the new owner's name.
• Notify the New Owner: Once the insurance company and DMV have updated their records, inform the new owner that the transfer is complete. At this point, they can start shopping for a new insurance policy or make any desired adjustments to the existing one.

Grace Periods and Temporary Transfers

It's worth noting that most insurance companies offer a grace period, typically ranging from 7 to 30 days, during which you can drive your new vehicle before officially adding it to your policy. This grace period provides some flexibility if you need to use your new car before completing the insurance transfer.

In addition, some insurance companies allow for temporary or short-term insurance transfers. These are usually applicable when you don't have access to your car and need to drive another vehicle for a short period. For example, if your car is in the repair shop, your insurance company may allow you to temporarily transfer your coverage to a borrowed car.

Avoiding Complications

Failing to properly transfer auto insurance can lead to unwanted complications. If you sell your car without transferring the insurance, you may still be held liable for any accidents or damages caused by the new owner. Additionally, driving without valid insurance can result in heavy traffic fines and legal consequences. Therefore, it's in your best interest to inform your insurance company about any changes in ownership and complete the transfer process promptly.

Failure to transfer insurance can result in complications

Failure to complete the transfer of car insurance can result in several unwanted insurance complications. Here are some of the key issues that may arise:

Invalid Insurance Protection

If the car insurance is not transferred to the new owner, the policy will remain in the previous owner's name. This means that any claims made by the new owner will be rejected since the policyholder and the vehicle owner are different. As a result, the new owner will not have valid insurance protection and will be responsible for any financial liabilities that may arise.

Claim Rejection

Failing to transfer car insurance can lead to claim rejection. If an accident occurs or the car is stolen, the new owner will not be able to file a claim and will have to bear the financial burden themselves. Therefore, it is essential to transfer the insurance to the new owner's name as soon as possible to avoid such issues.

Legal Problems for Previous Owner

If the previous owner does not transfer or cancel the car insurance after selling the vehicle, they may face legal problems in the future. It is the responsibility of the seller to ensure that the insurance is transferred to the new owner promptly to avoid any complications.

Financial Implications

Not transferring car insurance can result in financial implications for both the previous owner and the new owner. Claims raised against the policy for accidental damage to the car or third-party liabilities may be rejected due to the invalid insurance. This can lead to significant financial liabilities for both parties.

Driving Without Valid Insurance

In many places, driving a car without valid insurance is a violation of government rules and regulations. Failing to transfer the insurance to the new owner may result in fines, penalties, or even imprisonment if they are found to be driving without valid insurance.

Inability to File a Claim

As the owner of the car, it is the new owner's responsibility to insure the vehicle. If they fail to transfer the insurance to their name, they will not be able to file a claim in case of accidental damage or third-party liabilities. This can leave them financially vulnerable and responsible for any damages or liabilities that occur.

You can't transfer insurance to another person

While it is possible to transfer auto insurance to another person, it is not a straightforward process and is dependent on several factors. The most common case for this is the third-party sale of a vehicle.

The Process

The transfer of insurance from one person to another is a complex process that varies across different states and insurance companies. It is important to note that the transfer is not merely a change of name on the policy. Instead, it involves a thorough evaluation of the new owner's details, including their driving history, age, gender, and other factors. The new owner will be assessed as a new client, and the insurance company will determine the new policy rates based on this evaluation.

The Requirements

To initiate the transfer, the current policyholder must notify the insurance company and provide necessary information about the new owner. This typically includes personal details, driving history, and information about the vehicle. The new owner may also need to provide proof of vehicle ownership transfer and identification. It is essential to complete the transfer as soon as possible to avoid any lapse in coverage, as this could result in unwanted insurance complications.

The Complications

One significant complication of transferring insurance to another person is the potential increase in insurance rates. Since insurance companies assess the new owner as a new client, the rates may be higher, especially if the new owner is a young or inexperienced driver. Additionally, the new owner's driving history will be taken into account, and any history of speeding tickets or accidents may result in even higher rates.

Another complication arises when the insurance policy includes a No Claim Bonus (NCB). The NCB is a reward for safe drivers who have not made any claims during their policy year, and it cannot be transferred to the new owner. The NCB can only be transferred to a new vehicle owned by the same person. Therefore, if the current policyholder has accumulated an NCB, they will lose this benefit if they transfer the policy to another person.

Frequently asked questions