This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Insuring A Car You Don't Own





Driving a car that belongs to Mom and Dad? How do you insure it?

The question is a common one, and the situation is tricky, says CarInsurance.com consumer analyst Penny Gusner.

If you are living with your parents, you simply could be a listed driver on their policy. Usually a car insurance policy covers all the licensed drivers in the household who have permission to drive the car.

"It gets difficult when the driver of the car isn't on the title and doesn't live with the title holder," Gusner observes.

What you need in these cases is "insurable interest." Having insurable interest in property, such as a car, means you would suffer a financial loss if it were damaged or destroyed. Insurance companies require you to have insurable interest to take out a policy because without it you would have no incentive to protect the insured item.

You might even be tempted to damage it on purpose to collect the insurance payout if you were a real jerk.

That's why insurance companies generally require you to own a car to insure it.

Allowing someone to insure a car owned by someone else would also allow a person with a bad driving record to ask a friend with a good driving record to insure the vehicle, points out Karl Newman, president of the NW Insurance Council in Seattle. That would hide the real risk of the driver from the insurer.

"Hiding the real risk then means not enough premium is charged to cover future claims, and eventually this would drive up rates for the good drivers insuring with that company," he says.

Insurance companies also prefer that any listed drivers live in the household.The exception is if you're still in college.

Esurance, for instance, lets policyholders list full-time college students and their vehicles, even if the students are studying in another state, says Esurance spokesperson Danny Miller.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,304.37 -112.48 -0.65%
S&P 500 2,004.80 -16.45 -0.81%
NASDAQ 4,655.3950 -28.0120 -0.60%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs