Before a driver can hit the road, he must first purchase the minimum amount of liability insurance coverage mandated by his state. This insurance must be bought from a private insurance company. Insurance companies all have individual rules about who can and cannot purchase insurance from them, and at what price. Generally, a person cannot buy insurance for someone else if the car is in the other person's name.
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Insuring Other People's Vehicles
Generally, a person may purchase auto insurance for his own vehicle only. Most insurance companies will not allow a party to insure another person's vehicle. This is because the person driving the car may have little motivation to avoid a crash, as the policy is not in the name. In the eyes of insurance companies, this may increase the odds that the person will be involved in an accident, triggering a costly payout.
Listing Person on Policy
Although a person cannot have his car insured by someone else, the person who owns the car can add additional people to his auto insurance policy. So, the car owner could share a policy with another person who does not drive the car. In addition, the person who does not own the car would also be allowed to pay the car owner's auto insurance, even if his name was not on the policy.
Sometimes, a family member, such as a parent, will be allowed to insure another family member's car, even if the title is under the other family member's name. This is because the insurance company believes that the policy holder and the person to whom the car is titled are closely enough linked that both parties have an interest in preventing accidents.
In addition to adding a name to a policy, a person can also transfer the title of the car to the person wishing to pay for the auto insurance. Title transfers between family members are generally untaxed as long as the transaction is recorded as a gift and not a sale. However, insurance companies will require that the person who drives the car most be listed on the auto insurance policy.
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