Can I buy insurance on someone else’s car?
UPDATED: Feb 26, 2014
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Asked February 26, 2014
Car insurance is usually written for the owner of the car. Since a car is a piece of personal property, it is a difficult item to underwrite the insurance when it is being used by someone who does not have an obvious connection to the vehicle, called an insurable interest. Without that, you can be added to the owner's insurance, but cannot purchase a policy yourself.
An insurable interest means that if something happened to the car, you would suffer a financial loss. One instance where that might occur would be if the person who owns the car is no longer able to drive, but her car is your sole means of getting to your job to support yourself. This case is easier to prove if you live in the same home as the owner, but are not a member of their immediate family.
In the previous case, it is more common to add you to the policy of the owner. If the owner is not able to pay for insurance, you would be allowed to make the insurance premium payments, but could not authorize changes to the policy without her consent. The insurance company does not mind getting payments from a third party, because that does not affect the risks associated with insuring the car the way that selling a policy to someone who does not own the car would do.
The most common solution, if you must be the one to buy the insurance, is to have the car signed over into your name. This identifies you as the responsible owner of the vehicle, creating an insurable interest. However, it completely removes the original owner from any claim to the vehicle under a court of law. In effect, the car would belong to you, and so would all the responsibilities related to it.
Answered February 26, 2014 by Anonymous