Does Your Car Insurance and Registration Have to Be Under the Same Name?

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The most common car insurance arrangement is when the owner of the vehicle insures the vehicle in their own name. But there are situations where the owner of the vehicle may not want the insurance in their name, so they allow someone else to insure it. For example, when a college student gets a new car from their parents, the parents might insist that the student pay for their own insurance. While this arrangement can sound ideal, it does not always get the approval of the car owner’s insurance company.

Can Someone Other Than A Vehicle’s Owner Insure That Vehicle?

There are two caveats to this question that have to be taken into account before giving an answer. First of all, do the state insurance laws in the state where the vehicle is owned allow for such an arrangement? Secondly, will an insurance company within that state write such a policy, even if the arrangement is legal? In some states, it is legal to have someone other than a vehicle owner have vehicle insurance in their name.

Writing The Policy

The most common examples of someone other than the vehicle owner having insurance in their name for a vehicle are mostly family arrangements. A man may agree to buy a vehicle for his brother, but the brother has to pay for and keep the insurance. In these situations, the insurance company may insist that the vehicle never be driven for long distances and never be driven out of state. The insurance company will also want written permission from the vehicle owner to allow someone else to have insurance on the vehicle.

When The Arrangement Can Fall Apart

When parents buy a car for their child, the parents often try to teach the child a financial lesson by having the child get the insurance for the vehicle. The insurance company would usually be fine with the arrangement provided the vehicle stays local. When it comes time for the child to go off to college or move out of state for their first job, the insurance company might not allow such an arrangement and would cancel the policy.

If an insurance company cancels a policy for a vehicle being insured by someone other than the owner, then the fastest solution to the problem is to have the person paying for the insurance buy the vehicle off the owner. Insurance companies, in general, are more comfortable with having the owner of the vehicle be the one who has the insurance as well.

There can be situations where an insurance company and state laws allow someone other than the owner of a vehicle to insure the vehicle, but there will usually be guidelines that have to be followed for that insurance to stay in effect.