In an auto insurance policy, what does the term Interested Party mean?
UPDATED: Jul 26, 2011
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Asked July 26, 2011
The term Interested Party can be interpreted one of two ways. In the first instance, it refers to a person or organization with a vested interest in the vehicle, that is, they stand to lose property or income if the vehicle is totaled out. This might include an auto dealership or leasing agency who technically own the vehicle you are driving and therefore would be the party to lose out if the vehicle is lost.
In the other instance, an Interested party might refer to another person or organization that is added to the policy for coverage. An example of this might be a situation where the vehicle is privately owned by used by a non-profit organization for business purposes. If that organization relies on your privately owned vehicle, it could be said to have an insurable interest, or act as an Interested Party.
On the other hand, if you were purchasing the car directly from a person, then you would not have an insurable interest in the vehicle because the registration would still be in that person's name until it is paid for. In this situation, the owner of the vehicle must purchase the insurance policy and then add you as a driver, meaning that you are not eligible to collect a payout if the vehicle is totaled but you are insured when operating the vehicle. The owner of the vehicle is the insurable interest and you would simply be listed as a driver of the vehicle. If the car is then totaled out, your injuries would be covered, but the payout on the vehicle would be made to the listed Insurable, or Interested party.
Answered July 26, 2011 by Anonymous