Car insurance doesn’t have to be in the owner’s name. It’s certainly the most preferred option, but there are instances where this might not be advisable.
However, an insurance company has the right to refuse an applicant if they have no vested interest in the car that is being insured.
Putting an Insurance Policy in a Different Name
Teenager drivers pay significantly more than adults, with even the most basic cover costing thousands of dollars a year on average. One of the easiest ways to escape these costs is to allow the child to drive an insured vehicle.
However, this is not recommended as it can cause complications in the event of an accident. It’s imperative, therefore, to ensure they are completely covered, even if that coverage is expensive.
Many insurers require that the car registration and insurance policy are in the same name. It’s not a legal requirement, but it’s a decision they can take, nonetheless. As we have stated many times, it all comes down to the balance of risk.
As a young driver, your risk is higher than that of an older driver, and the same applies to homeowners over renters and married individuals over singletons. As far as the name is concerned, insurance companies believe that drivers who are invested in the car are more likely to drive safely and avoid accidents.
It makes sense. If a driver is not responsible for damage caused by collisions and accidents, they are more likely to drive recklessly and take risks.
Even if the application is successful and the registration and insurance are in different names, it could be grounds for denying claims at a later date. This is generally not true for liability claims but is not uncommon for comprehensive coverage and collision coverage claims.
Who is Responsible Following an Accident?
If your name is on the insurance policy, you will be liable for out of pocket expenses and premium increases following an accident. This is true even if the driver’s name is on the registration and they were responsible for the accident.
You may even be sued for damages. If they also have insurance, they could be liable as well, and your insurance company may tap them for damages. However, most of the blame and the responsibility falls on the shoulders of the main policyholder.
Summary: Whose Name Should a Policy be in?
An insurance policy should always be in the name of the registration holder and driver. If not, the application could be refused and even if it is accepted now, it may lead to complications down the line.
Don’t try to deceive your insurer. Be honest and upfront with them during the application process and if you have questions about changing names, ask them. As soon as you start lying or manipulating, you’ll find yourself on a very slippery slope that could lead to canceled policies and denied claims.