Does your car insurance have to be in your name?

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Joel Ohman
Founder, CFP®

UPDATED: Jul 31, 2017

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Here's what you need to know...

  • Insurance companies may deny putting coverage in someone else’s name due to a lack of insurance interest from the actual driver
  • The policyholder is still held responsible for any damages
  • There are plenty of ways to keep insurance rates low and in your own name

People may consider putting their car insurance in another individual’s name for a variety of reasons. Perhaps you are a teenage driver and want to avoid high insurance rates.

Most insurance companies require the vehicle registrant and policyholder to be the same individual. If you drive a car using someone else’s, this will be deemed as insurance fraud and you could face severe legal consequences.

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Reasons Insurers May Say No


Although your car insurance does not legally have to be in your name, insurance companies can rightfully refuse to issue a policy under this circumstance.

Insurers often view this as a risk due to a possible lack of financial interest in the vehicle. The non-policyholder may not suffer financially if the car were damaged or destroyed.

They may also operate the vehicle outside of the policies terms and conditions.

A direct insurance agreement between the actual driver and the insurance company establishes balance and fairness from both sides.

This also protects the insurance company from offering lower premiums to high-risk drivers that may have had prior accidents or traffic violations.

Putting your car insurance in someone else’s name could also be grounds for insurers to deny comprehensive and collision claims.

Most insurance companies require that all drivers operating the vehicle regularly be listed on the insurance policy. Failure to do so could result in denied future claims and accusations of insurance fraud.

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Responsibilities of the Policyholder

If the insured vehicle is involved in an accident with the other driver, not at fault, this could cause future insurance premiums to increase for the policyholder.

Although car insurance typically follows the vehicle and not the driver.

If a driver not listed on your insurance policy gets into an accident due to intoxication or driving without a valid license, you, as the policyholder, could be held liable and potentially sued for damages.

Any lapses in coverage could also affect future premiums.

What about parents getting insurance for their teens?


Teenage drivers who just recently received their driver’s licenses always pay higher insurance rates due to their lack of experience on the road.

To save money, parents will often allow their children to drive their already insured vehicles.

However, it is important to notify your insurance company of the new driver so they can be added to the insurance policy.

It is not good practice to allow a teenager to drive a vehicle on a regular basis without adding them to the existing policy.

This protects all parties involved and increases the chances of an insurance claim getting accepted in the event of an accident.

Some states will actually require your teen to demonstrate proof of insurance before they are issued their official license.

Keeping Your Insurance Rates Low and In Your Own Name

There are plenty of ways to strive for lower premiums so you can independently carry your own insurance policy. Besides maintaining a clean driving record.

The Insurance Information Institute outlines nine ways to reduce your auto insurance rates.

  • Compare Quotes 
  • Consider Insurance Rates Before you Purchase a New Car
  • Consider Higher Deductibles
  • Purchase bundles that include homeowners insurance 
  • Keep good credit history
  • Drive the vehicle as little as possible to take advantage of low mileage discounts
  • Get information about group insurance such as through employers
  • When comparison shopping, search for hidden discounts 

The Bottom Line


Not keeping your car insurance in your own name has great potential to cause many problems in the long run as the future can be quite unpredictable.

When inquiring about insurance rates, be sure to accurately answer all questions regarding your situation, including all regular drivers on the policy.

This allows the insurance company to use their own discretion to determine if they can provide you with the coverage you need.

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