Your Car Title and Your Insurance

A lot of insurance shoppers don’t realize that the name on your vehicle’s title is important when it comes to your policy.

In order to have an insurance policy, you must have an “insurable interest” in the thing you’re trying to protect. When it comes to your cars that means: you cannot insure something you don’t own. It’s not always that straightforward, however. If you lease a vehicle, you have a contract with the owner and that often creates an insurable interest. The owner/lessor in this case will often be listed as an additional insured on the policy.

One of the most common title scenarios is a household with multiple vehicles and multiple drivers. If the policy is written under the names of a married couple or single person that holds title to all vehicles, there generally isn’t an issue. However, if the household has a child that owns their own vehicle but isn’t listed as a “named insured” on the policy, there could be an issue there in the event of a claim. If that vehicle is in an accident, the insurance company may not be able to pay the claim to the child that actually owns the vehicle since they are not the owner of the policy itself. There may also be an issue paying a claim to the parents since they don’t actually own the vehicle damaged. Many companies also require that all vehicles on the policy be titled to the named insured or spouse before they’ll issue a policy in the first place.

At the very least, the above scenario could create a paperwork nightmare for the parents and child just to get a claim check issued. It could take much more time than a typical claim. At the worst, you could find yourself with a denied claim. There are solutions to the problem that you should explore with your agent, but it’s best to do that BEFORE you find yourself with a claim.

Every policy is different and the above explanation is not a guarantee of coverage. You should always discuss your specific policy and coverage with your agent before making any decisions