Who Owns Your Vehicle?
Your vehicle registration is an important part of your insurance policy. When the registration does not match the owner of the insurance policy, coverage will not be provided. At least not in the way you think it will.
Common situations our agents see:
- Children purchase a vehicle and are listed as the registered owner
- Generous family member outside of the household buys a car for the insurance policy owner and keep the vehicle registered in their name
- Small business owners register a vehicle in the business name and keep it on a personal auto policy
- Business owners purchase a vehicle in their personal name and add it to a commercial insurance policy
Named Insured vs. Driver
There are two types of people listed on and insurance policy. The owner of the policy, commonly referred to as the Named Insurance, and drivers. Drivers have been given permission to drive the vehicles owned and insured by the Named Insured. That is the only right the driver has. The drive DOES NOT have the right to give anyone else permission to drive the vehicle. The listed driver DOES NOT have permission to make changes to the policy, or submit a claim.
A Look at the Insurance Gaps
Let’s take a look at the situations listed above and common coverage gaps that can occur.
Child purchases vehicle and it’s added to parent’s insurance policy
The insurance is designed to protect the Named Insured. The contract applies to the Named Insured. So it’s very important that the vehicle owner have Named Insurance status in the event of a claim. If the owner of the vehicle in this case is at fault in an accident, the insurance carrier doesn’t have a duty to defend them as they are not the named insured and the vehicle is not owned by the named insured.
Generous family member purchases vehicle and it’s added to a policy owned by the driver.
Again, the policy is designed to protect the Named Insured. If the named insured is driving this vehicle and involved in an accident the insurance carrier will defend the named insured. When the vehicle owner is named in a lawsuit due to the at fault accident, the drivers policy has no duty to defend them. This leaves a potential gap for the generous giver. If a driver on this policy is at fault, the policy will not respond as neither the driver or the owner are the Named Insured on this policy.
Small business owner registers vehicle to business and adds it to a personally owned auto policy
This situation is similar to the one referenced above. If the business is a sole-proprietorship this not cause a problem as the business and the Named Insured are essentially the same. LLC’s and Corporations are another matter. If the Named Insured is driving the vehicle and at fault, the personal auto policy will respond, however when the business is named in a lawsuit due to the acts of the driver, there is no one to protect the business. And since the business is YOU, this is not a situation you want to be in.
Corporation owner purchases vehicle in personal name and adds to commercial policy
This is another case of the Named Insured not owning the vehicle listed on the policy. In this case, the corporation would receive protection from the insurance carrier, but the business owner would not individually have protection from the commercial auto policy. Most of the time, family members of the Corporation officers are not listed as drivers on a commercial auto policy. This creates another gap in coverage if an unlisted driver is operating the vehicle and causes bodily injury or property damage.
Good News! There is a solution!
Each of the above situations has a solution! What you need to know is that it’s not AUTOMATIC. You need to speak with your licensed insurance agent to review your unique situation. Your Insurance Professional can apply corrections to your policy in order to provide the coverage you expect.
If you don’t currently work with an Insurance Professional I highly recommend reaching out to an Independent Insurance Agency. Independent Insurance Agents work for YOU. They represent many different insurance carriers. Taking the time to get to know you and your unique situation allows an Insurance Professional to develop an insurance program for you, taking care to eliminate coverage gaps.
Let us know how we can help you!