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Most states require you to carry car insurance to drive legally, but what if you’re driving a vehicle that is registered to someone else? In most scenarios, you cannot purchase car insurance on a vehicle that is not in your name. If you drive a friend or family member’s vehicle or are gifted a vehicle that’s in someone else’s name, the legal owner is responsible for insuring it. However, there are specific policies that cover non-vehicle owners, and these types of policies may be worth considering if you frequently borrow vehicles from other people.
Can you insure a car you do not own?
Generally, you cannot insure a vehicle that you do not own. To fully understand why, it may be helpful to review how insurance works.
Insurance is technically a financial product. Although you are “covering” your vehicle, your insurance does not prevent the damage from happening. Rather, having auto insurance coverage provides you with financial protection by helping cover the claims expenses if you are involved in an accident.
Because auto insurance may pay for damage to your vehicle, as well as damage you cause to another driver’s vehicle (depending on the type of coverage you have), you must have what is called insurable interest in the vehicle. This means that you must have a financial stake in the vehicle you insure. If the vehicle is not registered to you, you have no insurable interest in it. Therefore, you cannot insure it.
Auto insurance claims
When an auto insurance claim is paid, funds disbursed by the insurer for the vehicle’s damage are paid to the insurance policyholder. If you were permitted to insure a car you do not own, you could potentially receive money for damage to a vehicle you have no financial stake in.
Think of it this way: You borrow a friend’s car and hit a pole. If you were able to insure the car, you could file a claim under your collision insurance and be paid for the damage, even though your friend is the one with the financial stake in the vehicle — they paid for it. Because you have no financial stake in the car, you have no right to any claim payout from the insurer.
How to get coverage for a car that is not in your name
Although the legal owner of the vehicle is the only person who can insure a car, it may still be a good idea to understand your other options to ensure you protect yourself financially from unexpected events. There are some situations in which you may be able to obtain auto insurance for a car you do not own so that you can get the coverage you need.
Renting a vehicle
If you rent a vehicle, you have a few options for auto insurance coverage. If you have an auto insurance policy on another vehicle, your coverage limits will often transfer to a rental car. However, if you do not have full coverage auto insurance, which includes comprehensive and collision insurance, your rental car would be left without coverage for repairs if damaged. There would be no coverage if the vehicle is stolen or vandalized either. You may want to check with your insurance company before renting a car to see how your coverage may apply to this other vehicle.
If you don’t have your own auto insurance policy, you may want to consider buying the insurance offered by the rental company. In fact, if you cannot show proof of coverage on another car, you may be required to buy the rental company’s coverage before you can rent the vehicle.
Borrowing a car from a friend or family member
Before driving a vehicle that has been loaned to you, you may want to ask your friend or family member to talk to their insurance company. Generally, you will be covered by their auto insurance policy even if you are not listed as a regular driver on the vehicle. This is called “permissive use:” the vehicle owner and the auto insurer are permitting you to drive the vehicle temporarily, so insurance coverage extends to you while using that vehicle.
If you borrow someone else’s car for an extended period, you may need to be listed as a driver on the owner’s auto policy. Additionally, the vehicle’s garaging address may need to be updated to your address so that the policy can be rated correctly. Regularly using a borrowed car — the definition of which will vary by company — and failing to notify the insurance company could result in a claim being denied for misrepresentation, so it is important to be transparent about the situation.
Being gifted a vehicle
Perhaps your parents or grandparents just purchased a new car and have agreed to give you their old vehicle as a gift. They may offer to keep the vehicle insured, but is that the correct way to handle the situation?
It likely depends on your living situation and age. If you still live in the same household as your parents (or whoever gave you the vehicle) and you are a minor, you may be able to keep the vehicle insured on your parents’ policy and add yourself as the vehicle owner.
However, if you are a legal adult or live in a different location, you will likely need to get your own auto insurance policy. Insurance companies know that vehicle registration and insurance changes do not happen overnight, so leaving the vehicle insured on the prior owner’s policy for a few weeks might be acceptable. However, you should do your best to get an insurance policy on the vehicle in your name as soon as possible and then register and title the vehicle to you.
If you work for a company that has given you a vehicle to drive, the car still needs to be insured. Typically, your employer will be the owner of the vehicle, meaning that you have no insurable interest in it. You will likely be added to your employer’s business auto insurance policy as a driver. You are not expected, or able, to take out a personal auto policy on a corporate vehicle that you do not own.
However, if you own a business and purchase a company vehicle, you will need to purchase business auto insurance coverage. The vehicle will need to be insured as a business auto rather than a personal one. If your business is the registered owner of the vehicle, the insurance policy will need to be in the company’s name.
Frequently asked questions
Legally, you probably do not need to buy auto insurance if you do not own a car. However, if you frequently rent cars or drive someone else’s car, it may be a good idea to buy a non-owner policy. These policies, also called named-operator policies, provide some coverage to you as a driver without insuring a car. These policies usually include liability coverage but may also provide you with medical payments, personal injury protection (PIP) and uninsured and underinsured motorist coverage.
Drivers who do not own a car but are licensed may be able to obtain a non-owner car insurance policy. These policies may be useful for those who frequently borrow or rent cars. A non-owner car insurance policy only covers the person listed on the policy and typically includes liability coverage. These policies may also sometimes include medical payments, uninsured/underinsured motorist or PIP coverage, depending on the state and company.
There is not one car insurance company that’s the best for every driver. While there are lots of car insurance providers on the market, it’s difficult to say which one is the best car insurance company overall. That’s because the right car insurance carrier for you will depend on your personal car insurance needs and what you value in an insurance provider. For example, you may prioritize cheap rates over high customer satisfaction ratings, or you may want a provider that can offer you a wide range of additional coverage types. To find the best car insurance provider for you, you may want to research multiple companies and compare quotes to determine which may fit your needs.
The average cost of car insurance in the U.S. is $2,014 per year for a full coverage policy and $622 per year for a minimum coverage policy. However, car insurance rates are personalized for each driver. Factors like your state, ZIP code, claim history, driving record and more can impact your premium. Based on your driver profile, your car insurance premium might be higher or lower than average. Getting quotes from several companies might help you find the cheapest coverage for your needs.