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Non-Owner Insurance Policies: Important Details

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Just because a person's name isn't on the registration for a vehicle doesn't mean that they don't have some level of responsibility for it. If you are in possession of a vehicle with a similar scenario, you're probably trying to figure out the best way to protect yourself financially in the event of damage to the vehicle. Non-owner auto insurance might be an option. 

Local Laws

Even if you are in a situation where you might have some financial responsibility for the vehicle, you should first check your local laws to ensure non-owner coverage is possible. In some states, only an individual who is listed on the registration can ensure a vehicle. 

If you live in a state with these guidelines, you cannot legally insure the vehicle. If it's vital that you insure the vehicle, speak with the owner about adding you to the registration. If you're successful, you can purchase a traditional policy for the vehicle. 

Insurable Interest

Make sure you have a good understanding of what true financial responsibility entails. Even if the state law allows it, some insurance companies will require applicants to prove that they have an insurance interest in a vehicle. Take a person who has inherited a vehicle that's waiting for the transfer of the title to be finalized, for instance. In this instance, for all intents and purposes, the individual has a legal claim over the vehicle and insurable interest. On the other hand, a parent who has a child with a vehicle in their name might have financial responsibility for the vehicle in the technical sense but would not have an insurable interest, so their child would need to take out a policy in their name.

Hidden Problems

It's important to do your research to ensure this option is best for your situation, as it can sometimes cause grievances. For instance, consider someone who resides in a state that requires a registration-insurance match. 

The original owner might add the person to the registration, but if they don't live in the same household, there could be issues. Some insurance companies have a policy that requires all parties listed on the policy to live in the same household. However, since this is typically a company-specific rule, you could shop around to find a policy that accommodates your needs. 

Do you think non-owner insurance is right for you? Contact an auto insurance professional for further details and policy assistance.