Driving Someone Else's Car? Here's Your Insurance Lowdown

Auto Insurance

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If you drive someone else’s car, you might wonder about buying insurance for it.

But when it comes to purchasing an auto insurance policy, the car owner is the one in the driver’s seat. Only he or she can insure the car.

Still, you must be listed as a driver on the owner’s policy in some situations.

Why the car owner buys the insurance

To insure something, you must have a financial stake in it, known as “insurable interest.” Insurers figure that someone who doesn’t own a car wouldn’t take care of it and try to prevent damage and theft the way an owner would.

This is why generally you can’t buy insurance on someone else’s vehicle, says Loretta Worters, a spokesperson for the Insurance Information Institute.

» COMPARE: Car insurance rates

How to handle common scenarios

The situation How to handle car insurance
Move back home and drive a parent’s car You should be added as a driver on your parent’s policy.
Regularly drive a roommate’s car You should be added as a driver on your roommate’s policy.
Occasionally borrow the car of a friend or relative who doesn’t live with you The owner’s policy will likely cover you when driving that car. A standard car insurance policy covers drivers who use the car occasionally with the owner’s permission. Drivers who live in the household should be listed on the policy, but others don’t have to be listed to have coverage, as long as they don’t regularly drive the car.
Drive a parent’s car away from home at school Your parent should list you on the policy and tell the car insurance company where you’re going to school. The car insurance premium might be adjusted according to the school’s location.
Drive a parent’s car after college, keeping it at your apartment Tell the insurance company. Insuring a car at one address when it’s kept at another is fraud, Worters says. Car insurance rates are based in part on where a car is kept. Your parent could also add you to the car title, or sell or transfer the car to you. Then you could register the car and buy car insurance.
Move out of state after college and take a parent’s car Your name will need to be on the car title to register the vehicle in the new state and buy car insurance there. Contact the motor vehicles department and an insurance company or agent in the new state to learn your next steps.

» MORE: What does car insurance cover?

Barbara Marquand is a staff writer at NerdWallet, a personal finance website. Email: [email protected]. Twitter: @barbaramarquand.