Can someone else insure your financed car?

Quick insights

• Someone else can insure a car that you’re financing if that person has an insurable interest.
• To have an insurable interest in a financed car, someone would have co-signed the financing.
• Without an insurable interest, someone else cannot purchase insurance for your car directly.

Setting up an insurance policy for a financed car might be complex in some situations. Communicate with your lender, insurance company, and meet both of their requirements for setting up or adjusting the policy.

Is it possible for someone else to insure your financed car?

Yes, if someone besides you has an insurable interest in your financed car, they can be on the insurance policy. Getting adequate coverage can be straightforward even for financed cars that are shared. In general, contact the insurance company and follow its process for setting up or adjusting car insurance coverage.

What is insurable interest

Insurable interest means that a person has a financial obligation if a vehicle were damaged or totaled. When a car is being financed, anyone on the agreement has insurable interest, including the lender.

When would someone else be involved in your financed car’s insurance?

When you finance a car, there are a few situations when someone else would be involved in the insurance policy or payments.

Help with insurance payments

If you cannot pay for car insurance, you may be able to borrow money from a friend or family member. However, without an insurable interest, that person cannot purchase insurance for your car directly or be named in the insurance policy. The payment arrangement would have to be separate from your financing and insurance obligations.

Shared ownership and co-signers

Each person on the title or financing agreement has an insurable interest in the car. If the insurance company requests it, someone can prove insurable interest and be listed on the insurance policy by providing financing documents or a copy of the car’s title. Co-signers can come off an insurance policy after the loan is paid.

Non-owner drivers

Anyone who drives a car should be insured to do so. You may be able to add someone who regularly drives a car you’re financing by contacting the insurance company. Although that driver cannot purchase the policy without proving their insurable interest, they could be added as an additional driver or additional insured.

It’s the car owner’s responsibility to be sure non-owner drivers are insured. Risks to car owners if a non-owner driver is involved in an accident include responsibility for vehicle damages or a total loss. Plus, there’s potential legal liability for the car owner if there is property damage, injury or death (both drivers and third parties).

In conclusion

Another person can insure a car that you are financing if they have an insurable interest. However, that person cannot purchase insurance for your car without proving their insurable interest. Setting up car insurance for multiple people can be straightforward but should always follow the insurance company’s and lender’s requirements.