Does a Car Insurance Policy Have to Be in the Same Name as the Car Loan?

Last Updated on July 28, 2023

If you’re leasing or financing a vehicle, then you may have questions about car insurance. Some of the more common questions we get are: Does your car insurance policy have to have the same name as your car loan? Can someone else insure your financed car? Does your car insurance and registration have to be under the same name?

Today, we’re answering these questions to ensure you stay protected on the road.

Yes, Your Car Insurance and Car Loan Must Have the Same Name

Does a Car Insurance Policy Have to Be in the Same Name as the Car Loan?Generally, your auto insurance policy has to be in the same name as your car loan.

This isn’t a requirement from the car insurance company. Instead, it’s a requirement of the financing company that gave you the car loan.

The financing company is using your new vehicle as collateral in the loan. In order to qualify for the loan, you’ll need to have a full coverage policy under your name. This ensures the vehicle – the collateral – stays protected no matter what happens.

In other words, the financing company is protecting its financial interest in your car. If something happens to your vehicle before it’s completely paid off, then your full coverage auto insurance ensures the financing company doesn’t lose money.

When your car insurance policy is in the same name as the car loan, it simplifies the claims process. The insurance company can send the claims settlement check to you.

If you fail to get adequate car insurance on your vehicle, then the financing company might declare that you defaulted on your car loan. You’re violating the terms of the financing agreement. You’re required to have full coverage car insurance on your vehicle and that car insurance should be in your own name.

The Car Insurance Policy Needs to List All Included Drivers

The car insurance policy may be in your name. However, you will still need to list all included drivers on that policy. That can include anyone in your household – like a teenage child who may drive the vehicle.

By naming other possible drivers on your policy, you’re ensuring that your vehicle stays protected in all circumstances.

You Need to Be the Named Insured Driver on your Insurance Policy When Leasing or Financing a Car

Insurance companies make a big deal out of who the “named insured” driver is on a policy.

The named insured driver is the person who purchases the insurance policy. In most cases, this is also the person who owns the vehicle or took out the car loan.

As the named insured, your responsibilities include the following:

  • You’re the owner of the vehicle (although some insurance companies do not require the named insured to be the owner of the vehicle)
  • You authorize all changes to the insurance policy
  • You verify claim details and are the named individual on any claim settlement checks

In most cases, the named insured will also be the person who signed the car loan. However, as the named insured, you can allow other people to drive your vehicle. Insurance follows the car – not the driver. That means your car insurance policy should cover anyone driving your vehicle with your permission – even if that driver is not the person named on the car loan.

You Need Full Coverage Car Insurance

Most states require you to have basic liability coverage. This bare minimum insurance allows you to legally drive on roads in your state.

If you’re leasing or financing a vehicle, however, then you’ll need more than the bare minimum insurance coverage. You’ll need full coverage car insurance. Full coverage car insurance includes collision and comprehensive coverage in addition to basic liability coverage.

Again, the full coverage requirement is designed to protect the financing company’s investment.

Once you pay off your car, you’ll have the option of dropping full coverage insurance to save some money.

Can You Insure a Vehicle That Isn’t In Your Name?

In most cases, getting insurance for a car you don’t own will be difficult.

Many car insurance companies will prevent you from getting car insurance on a vehicle that isn’t registered in your name. In fact, certain state laws prevent you from doing so. In New York, for example, vehicle registration and insurance go hand in hand.

Other states are laxer. In California, for example, the name on the car insurance policy and the name on the vehicle registration do not have to match. However, you’ll still need to provide proof of insurance in order to register the vehicle.

If you do need to insure a car that you do not own, then compare insurance quotes online today. Talk to a few insurance agents to determine if it’s possible. You might be turned down by several companies before finding someone willing to work with you.

Conclusion – Does the Name on Loan and Insurance Have to Match?

Yes, your car insurance policy typically has to be in the same name as your car loan. Usually, your insurance and registration also have to be under the same name. Most financing companies also require you to have full coverage car insurance while your car loan is being paid off.

James Shaffer
James Shaffer James Shaffer is a writer for and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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