Joint car loan auto insurance tips

Getting a joint car loan is a serious commitment for both parties. When it comes to auto insurance, there are additional things to consider when deciding whether or not to get a joint car loan, especially if both parties do not live at the same address.

Basically, if you have a joint car loan with someone you live with (and you both have current driver’s licenses), your auto insurance company will almost certainly require that both you and your co-signer be listed as drivers on the policy. However, if you and your co-signer do not live at the same address, you have other options. The person that doesn’t drive the car could choose to be listed as “Additional Insured” on the policy, or could decide not to be listed on the policy at all. Let’s explore these two options.

If you are listed as “Additional Insured” on an auto insurance policy, the primary driver (the “Named Insured”) only needs to provide the name and address of the Additional Insured – nothing else is required, including driving and credit checks. This means that the auto insurance rate will be solely based on the Named Insured’s information and not on the Additional Insured’s. The auto insurance company will use the address to mail notifications on the policy, including payment due notices and claim information. This option may allow the co-owner of the vehicle to be protected from liability in case the driver of the vehicle is the cause of a serious accident. If you are a co-signer on a vehicle and do not reside with the primary owner we strongly recommend that you choose this option.

Your other option, however, is not be included on the auto insurance policy at all. As we have said, if you are not listed on the policy, you will not receive any notifications regarding the policy, so if something goes amiss with payments or anything else, the insurance company will not notify you – you will need to rely on your co-signer to inform you of any issues.

Doesn’t sound like that big of a deal right? Well, it could be. For instance, if your co-signer is perhaps your college-aged son or daughter, they might get into a situation that they do not want to tell you about (for example, forgetting to pay the policy or getting into an accident) and the insurance company would not notify you. Also, if someone decides to sue you, the insurance company has no obligation to defend you, even if they did decide to defend the policyholder. Both issues would be solved if you are listed on the policy, so again, if you are a co-signer, we strongly recommend that you be on the auto insurance policy for that car.

To compare auto insurance quotes online visit AnswerFinancial.com, or if you prefer, call 1-800-258-5101 and have a licensed insurance agent walk you through your options, compare coverages and discounts, and help you through your purchase.

20 Comments on "Joint car loan auto insurance tips"

  1. Debra Clawson September 26, 2016 at 3:43 pm · Reply

    I cosign for my grandson and have insurance that I pay he can’t keep a job can I cancel it what can I do

  2. Bathroom Flooring July 30, 2016 at 4:43 pm · Reply

    Well I sincerely enjoyed studying it. This tip provided by you is very practical for proper planning.

  3. Tom June 26, 2016 at 5:25 am · Reply

    I am listed second on title as co-owner of daughters car. Does that make me responsible to pay for the insurance on it or does my daughter have the responsibility to insure the vehicle.

  4. Sally June 11, 2016 at 2:01 pm · Reply

    I cosigned on a vehicle and have the insurance in my name with an additional driver added. The insurance is for the additional driver who makes the monthly payments. If the monthly payments are not made and the insurance gets canceled, would my license get suspended?

  5. Alissa June 6, 2016 at 10:47 am · Reply

    My moms ex husband Co signed a car for me. They are divorced and have no contact. I’m on my moms insurance policy and my car was totaled. My insurance company said they will not cover my car because I didn’t lost my ex step dad as another owner on the policy. I was not aware I had to do that. He’s never driven it and I make all payments. I need help!!!!

  6. Nancy K May 9, 2016 at 8:39 am · Reply

    Hi, my son recently purchased a car. I wanted him to get started on building a credit score so we took out a loan in his name even though he has the money to purchase the car, so we did that, and put the car in his name. However, now that we have done that, I’ve been informed that he can no longer be on my insurance and oh by the way, his insurance policy (he is 22) will be more than $1100 more as an individual than if the car was under my name and he was under my policy. Does that sound right? is there any way for him to get a loan (and hence the credit score) but still be under my policy?

  7. Burlington MA Insurance December 23, 2015 at 11:26 am · Reply

    Great tips, I completely agree about having co-leasers listed on the insurance policy. It just makes everything easier. Is it more expensive (in the short term, excluding any accidents) to have co-signers listed on the same policy? Thanks!

  8. lexy December 4, 2015 at 5:26 pm · Reply

    Some time next month i supose to be getting a car i wanted my mom to co -sign for me so the car insurance could be cheaper..1 of my questions is how cheap will the insurance be every month shes 45 im 20.An also by her co -signing do she have any rights to my car we dont live together

    • Julie January 11, 2016 at 6:28 pm · Reply

      It is my understanding that the co-signer is responsible for the car payment as much as you are. That said ( I co-signed my son’s loan), if he defaults on the payments and I have to make them, I will be driving that vehicle. So I guess what I am saying is that you are co-owners as long as you have a co-signed loan

  9. Lindsey McDonald November 16, 2015 at 8:54 am · Reply

    My sister and I are currently sharing the same car. I am the primary buyer and she is the co-buyer. Both of our names are listed on the title as buyer and co-buyer, and it is still under financing with my bank. I am moving out of state next year. Do I still have to have her on my insurance with complete coverage if we no longer live together?

  10. Yesenia September 18, 2015 at 7:41 am · Reply

    My mom and I currently have the same policy. We got it when I still lived with her. Now that i dont live with her we wanted to look around to see if we found something cheaper but im not sure if we will be able to get it together since we dont have the same address. We still drive each others car.

  11. Mussah August 25, 2015 at 10:20 am · Reply

    Got a situation here. I have a vehicle registered in NC but I have recently moved to MA. Trying to convert the registration has become a headache as my cosigner, who lives in NC, do not want to be in my insurance whatsoever. I went to the RMV and they say he has to be in the RMV-1 form which is impossible since his name is not in my insurance but on my registration card as a co-owner. Is there a way out? Thanks

  12. Mery urquiaga August 20, 2015 at 2:11 pm · Reply

    Me and my son finance a car registration is in my name and his name if i like he insurance the car in his name only what happen with my florida licence driver if i dont carry a insurance in my name thanks in advance for your help

  13. William Miron June 6, 2015 at 4:06 pm · Reply

    My friend is getting a car loan for a used 2013 car. My question is can I insure this car with my insurance policy since I will be the primary user of this automobile?

  14. Renee May 12, 2015 at 6:03 am · Reply

    I am financing a car and my cousins grandson wants to take over the payments, he’s still in high school. His father will carry the Ins. Do you think this is a good idea?

    • Justine Suarez May 21, 2015 at 5:40 pm · Reply

      Great question! While I can’t give you a recommendation one way or another, I can tell you that there are some excellent forums on the subject of leasing and financing vehicles where you may find the kind of feedback you’re looking for. When I was researching financing, I found Reddit to be an excellent resource.

  15. Tracy Baty May 11, 2015 at 7:38 pm · Reply

    If I get a car in my name but have a cosigner does the insurance have to be in my name or can I just be listed as additional insured and he have the insurance in his name? We do not live together.

    • Justine Suarez May 21, 2015 at 5:35 pm · Reply

      Excellent question! One of our insurance agents may be able to provide you with a bit of info about this. Give us a call at (800) 258-5101.

  16. Kevin Right March 6, 2014 at 8:47 pm · Reply

    Hi Chad,

    Question.. Does the loan holder need to be listed as a driver on an insurance policy or does the car just need to be insured? A friend of mine’s husband got a DWI so she transferred the vehicle into someone elses name (so not to have whisky plates) but retained the insurance under her name. This vehicle however did not have a loan.

    Reason I ask is a friend recently received a DWI and they have a rather expensive car so insurance rates are going to increase dramatically. Could they have the insurance for the vehicle be held by someone else not listed on the loan and have themself listed as the Additional Insured? OR, could they add someone else to the car title (not the loan) and have them hold the insurance for the vehicle? I think you see what we are trying to get at, the cheapest way to have the vehicle insured.

    Thanks,
    KR

  17. garrick evans September 5, 2013 at 7:10 pm · Reply

    I co-sign on a auto loan with my then wife now we are divorced. she was unabled to refinance the car because of bad credit. she now let someone else make the payments despite both of our names being on the car,so my question is if neither one of us has insurance on the car will our driver’s license be suspended?

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