“Do I have to own something in order to insure it?”

“I’ve been insuring my grandson’s car for years now with my old insurance company.  You’re telling me I can’t?  What gives?”

“I want to insure my fiancee’s car on my policy.  What’s the problem?”

“My Mom still owns and lives in her home.  I take care of all her affairs.  Why can’t I insure her home under my name?  Why should this be a hassle?”

I assure you most of our clients are not as surly as in the examples I’ve given above, but, why not have some fun?  I’ve lost track of many things in my years as an insurance agent, keys, passwords, my outdoor measuring wheel and my sanity (usually on Friday afternoons fifteen minutes before closing).  I’ve also lost track of the number of times I’ve heard people say that they’ve insured other people’s stuff .  Bottom line is, as a rule, you can’t insure something you don’t own.  That goes for cars, homes, boats, motorcycles, etc.

What’s the simplest solution?  Create co-ownership in the property.  For an auto, have the title transferred (approximately $35 in cost) to list the name of BOTH parties as owners.   For a home, it’s more complex and costly, but the end result is the same.

What’s the consequence of either inadvertently or knowingly insuring something you don’t own?  According to a claims manager of a Fortune 500 insurance carrier I conversed with recently, if such a vehicle was insured at the outset of the policy, it’s common for an insurance company to deny coverage and refund premium for the uninsurable vehicle.  Ouch!  Sure, an individual insurance company may decide to “get creative” and allow for a covered exception to this rule.  That would be up to the insurance company after they know all the facts.  If an insurance company or an agent tells you that an insurance company makes an exception to this rule…get it in writing!

I hope this helps.

NOTICE AND DISCLAIMER:  Information provided in this Blog is general in nature and intended for educational and informational purposes only. The Service is not intended to offer specific legal, business or other professional advice, and is not a recommendation that a particular course of action be followed. In addition, contributors from Superior Insurance Services that volunteer their time and experience to provide this information do not assume and have no responsibility for liability or damage which may result from the use of any of this information. If specific legal or other professional advice is required or desired, the services of an appropriate, competent professional should be sought.

April 9th, 2012 by Superior Insurance Services