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  1. #1
    Join Date
    Oct 2004

    Default Can I buy insurance if someone else is paying the loan?

    My grandmother bought a car in her name for me, as I didn't qualify for the loan. I will be the only driver, with my wife. I already have a policy on our other vehicle and want to just add this vehicle to my policy. Since the loan is only in my grandmother's name, can I add this vehicle to my policy, with my grandmother as a driver? Or does she have to take out another policy to cover this car herself? Thanks.

  2. #2
    Join Date
    Sep 2004

    Default The Insuranble Interest

    janbiz - you are describing a situation that can get you into difficulties in some jurisdictions. That is, if the car is titled in somebody else's name, your insurance company may try to dispute its obligation to pay for some or all of the damages resulting from an accident on the basis that you had "no insuranble interest" in the car.

    You may actually worsen the situation if you falsely declare your grandmother as the drive of the car, where she is not, as the insurance company may claim that you committed fraud and that the coverage should be invalidated.

    You should talk to your insurance agent about your situation, and make sure that you will be fully covered. It may be that you have to do something along the lines of having your grandmother purchase a policy with you designated as the primary driver, but other options may be available depending on state law. You are wise, though, to think about these issues before getting yourself into possible difficulties with your coverage.

    If your insurance agent tells you "The law says one thing, but everybody knows that this happens", I would suggest getting some form of written confirmation from your agent that you will be covered. Sometimes insurance agents make questionable representations to get a policy, then deny them at a later date when the policy is challenged by the insurance company.

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