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Why Auto Insurers Want Your Name On The Title

Question: I've been told that a vehicle's title needs to be in your name to insure the car, is this true?  If so, why do auto insurance companies care if the vehicle's title is in my name or someone else's name?

Answer: Yes, car insurance companies normally require you to own the car (have your name on the title) to insure it.  Why do auto insurers care who holds the title to a car?  It's all about the person insuring the car has a reason to protect it.

Having insurable interest in something, such as an automobile, means you would suffer a financial loss if the item were damaged or destroyed.  You have insurable interest in any property that you own. Car insurance companies want a policyholder to have insurable interest in the insured vehicle so that you are motivated to protect it. 

If you don't have a financial stake in a car, auto insurers fear you may not take efforts to keep it from being in an accident or totaled out because you wouldn't really be losing anything.  You instead may be enticed to damage the vehicle if the real owner gets on your bad side because it would be their loss and not yours. 

While it's preferable for your name to be on the title and registration of the vehicle you want to insure, there are some car insurance carriers that will allow you to buy a policy for a car you don't own but have care, custody and control of.  (See “ Insuring a car you don't own”)

You will have to shop around to find such an insurer in your area.  Be upfront with car insurance companies that you don't own the car but that you have possession of it, and explain why you want to insure it.  Keep in mind; most insurance companies will required you to  list the actual car owner on the policy as such since that titleholder may need to be included in claim discussions if the car is totaled out.

Even though there are some auto insurance companies that permit you to insure a car you don't own, not all states allow it. 

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