Car insurance is one of the most essential things you need to have to legally and safely drive a car. It is as essential as a driving license, license plate, or even a steering wheel! With over 6 million passenger car accidents happening in the US every year, no wonder why people and the government have put so much attention to auto insurance. As essential as it is, sometimes vehicle insurance can be very complicated, and sometimes confusing. 

One of the most common confusions is regarding the owner of the vehicle and the owner of the insurance. Since auto insurance companies insure people as much as they insure vehicles, what would happen if you want to get insurance for a car that you do not own. Or in other words, do your car insurance and registration have to be under the same name? The answer to this question can be a little tricky.

Understanding Auto Insurance

It is important to briefly understand what auto insurance companies do to tackle this dilemma. Insurance companies, and not just auto insurance are risk-management companies that make money by minimizing risks. If more people started making claims (if they take in high-risk individuals), the company would be bankrupt! This is why insurance companies analyze every risk factor and do a rigorous background check to make sure the risk is minimum. 

Remember this risk factor as it is going to be vital in this article and the question being asked. So when there’s an accident, a policyholder can make claims against his/her policy and get the coverage money. This is how auto insurance (and every insurance for that matter) works. 

So how does this relate to the topic of this article? It all comes down to the risk factor. 

Insurance and Registration Under the Same Name 

There is only one state in the US that legally states that the insurance policy and the vehicle registration must be under the same name. So if you are from New York, here’s the answer; yes, you need to have the insurance policy and vehicle registration under the same name. For every other state, there is no such law, but this does not mean you can have different names for insurance and registration of the vehicle. 

Even if there is no law, it depends on the insurance company if they allow it or not, and most probably, they are not going to allow it. If you claim your policy for a car that you crashed that was not registered under your name, the company can deny underwriting the insurance. 

So it is very important to discuss this with the insurance agent or any representative from the auto insurance company before you buy the policy. The average full coverage most companies offer does not allow claims for other vehicles. 

Why is it Not Allowed? 

Remember that insurance companies are risk management companies and the way they make money is by minimizing it? This is the reason why most companies don’t allow insurance claims with different registration names. Since the car is not registered in your name, you have not paid for it, and that does not make it your insurable interest. 

Insurable interest means that when someone buys a car, they will protect it, and prevent accidents and damages because it is their investment. You would not want to crash your car because it costs a lot of money, and it is dear to you. But why would someone else care about your car if they have not paid for it? This is what increases the risk factor for the insurance company. 

Not allowing insurance claims for cars not owned by policyholders prevents fraudulent claims and more claims in general. This is why you’ll have a really hard time trying to get the insurance money if you crashed someone else’s car. 

But sinister insurance fraud is not always the reason why you’d want to insure your car even if it’s not registered to your name. The car could belong to someone in your family, your wife, your parents, etc and you want to drive it safely. Luckily, there are some ways you can do that without getting into any hassle. Here’s how. 

• Become Co-Owner: Perfect for people who use their spouse’ car regularly. You can make yourself the co-owner of the car and this would prevent any complications in case of an accident. The process is simple (could take some time) and worth it if you drive someone else’s car daily. Just visit your state’s DMV and get done with all the formalities. 
• Add Your Name to the Owner’s Insurance Policy: If you don’t want to spend an eternity at the DMV, another way of insuring the car while you drive it is by adding your name to the car owner’s insurance policy. This process is fairly simple and won’t take too much time. It tells the owner’s insurance company that someone else is driving this car and it is by the permission of the owner. Different insurance companies have different procedures, so contact them to know more about them. 
• Non-Owners Insurance: Many auto insurance companies offer non-owners insurance policies which are great for people who frequently drive someone else’s car or use rental cars often. This policy specifically covers cars that you do not own and could come in very handy if your primary auto insurance does not agree to a settlement.