In most states, the vehicle owner and person insuring the car don't have to be one and the same. Although this arrangement is legal, as there is no federal law prohibiting this practice, your insurance company may refuse to issue a policy under these circumstances. And even if it does issue you a policy, there is a risk it may later refuse to pay a claim because of the different names, so it's best to familiarize yourself with your insurance company's policies before any problems arise.
Whether someone else can insure your car depends on state requirements and insurance company policies. Even if your state and insurance company allow it, this arrangement can still create problems down the road if you need to file a claim.
Getting Insurance as a Non-Owner
Typically, the person who owns a car is the person who insures it. However, most states permit auto insurance policies to be paid by someone other than the registered owner. The same cannot be said of all insurance carriers. Some will not insure a vehicle if the policyholder and car owner are not the same. Even if someone other than the vehicle owner insures the car, it is possible the insurance company may later deny payment on a claim for this exact reason. This is particularly true if the company later determines there wasn't a legitimate reason for having a different person insure the vehicle, which may suggest fraud on the part of the individuals involved.
Raising Red Flags
For example, if the vehicle owner has numerous traffic violations and accidents on his record, he may get a friend or family member to insure the car on his behalf to avoid high insurance premiums. If the insurance company later determines this to be the reason for the different names, it may deny payment on a subsequent claim due to the driver's attempt to conceal his driving record and higher risk.
Considering Potential Problems
In the event of an accident, or if the insurance company needs to total your car, having your policy in someone else's name adds an element of confusion. When it comes time for a payoff, the insurance company may remit the settlement check to the person named on the vehicle's title, and not to the person actually driving the car and paying for the policy. Also, if your policy's issuer has reason to believe that the car is insured by someone else other than the title holder for fraudulent purposes, this can cause delays or flat out denial of a payment on a claim, even if the company knowingly provided insurance. The insurance company needs to take time to do an internal investigation before paying a claim, and if there is a discrepancy between the names on the policy and the title, this will inevitably delay you receiving your money.
- Law Dictionary: Does Your Car Insurance and Registration Have to Be Under the Same Name?
- New York State: Insurance in a Name Different From the Name on the Vehicle Registration
- J&S Coverage: Registering and Insuring a Car You Don't Own
- ValuePenguin: Can You Insure a Car That's Not in Your Name?
- 4AutoInsuranceQuote.com: Can I Carry Auto Insurance for a Car If the Title Is Not in My Name?
Based on the West Coast, Mary Jane Freeman has been writing professionally since 1994, specializing in the topics of business and law. Freeman's work has appeared in a variety of publications, including LegalZoom, Essence, Reuters and Chicago Sun-Times. Freeman holds a Master of Science in public policy and management and Juris Doctor. Freeman is self-employed and works as a policy analyst and legal consultant.