Do you have insurance for your car on behalf of someone else? 

If you’ve contracted for insurance on your car from a neutral third party, you must be aware of the disadvantages so that you don’t face any surprises in the future.

You can obtain auto insurance on behalf of someone that is not the owner. While the law permits this, insurance companies can raise issues. Be aware of the steps you must consider when you purchase auto insurance for another person.

Who is the auto insurance policy policyholder?

Usually, mandatory insurance for cars must be bought by the car’s owner. There are exceptions. However, that is not mandatory; this is the primary definition of compulsory civil liability insurance defined through Decree No. 291/2007. Third-party insurance (as it is also referred to) is a form of insurance that can be taken out on behalf of another person in the following situations:

  • Usufruct in the vehicle
  • Sales with reservations of title
  • Leasing cases for financial purposes.

In addition to these conditions, there is nothing in the law that prohibits the insurance company and owner from becoming two separate people. So, insurance companies generally need to determine who is the driver of record of the insured vehicle.

Examine the contract and be sure you’ve got the authorization to obtain the insurance.

However, even if there’s no lawful prohibition, if you have a vehicle registered that is registered in your name and purchase insurance for a neutral third party, then you’re likely to run into some difficulties. Though insurance companies know that in certain circumstances, the premium for insurance may be more beneficial depending on the motorist’s age or background, this isn’t often recognized.

So, in the case of an accident or claim, you might have to raise concerns with your insurance company, mainly if there are any deaths or injuries. In extreme circumstances, the insurer may even deny the claim or compensation with the complete freedom to decide.

In order to get around this restriction, it is best to review the contract before you sign it so that you can be sure of the details and that you are legally authorized to sign it.

If you loan your vehicle, you must inform the insurance company.

Car insurance is crystal clear in this regard: it is an obligation concerning civil liability toward other third parties, regardless of whether individuals are being transported and for bodily or property injuries. Thus, if you are driving your family member’s vehicle or friend’s vehicle, you should always notify the insurance company to ensure that it is included and considered in the policy.

Also Read: Check Car Insurance Over The Internet

What if the person I loaned the car to isn’t licensed to drive?

In this situation, the driver may be entitled to reimbursement compensation if he doesn’t possess a valid driving license or has taken a drive without permission. In the most extreme instances, the insurance company may even have the power to pursue an action for criminality against the driver, if it wills, provided that there isn’t any agreement with the driver.

Other aspects to be considered

Statistics indicate that drivers who are over 25 and who have had a license for five years are more mature and experienced in driving and, therefore, have fewer accidents. So, considering this data, it is very likely that the insurance cost is reduced significantly when someone has reached 25 years and five years of license. But, it would be best if you negotiated the same. If not, the insurer won’t automatically grant you the appropriate decision.

Thus, if you’re an adult taking the insurance for your vehicle under your name, but your child is driving and is already at that age and number of years on the license, conduct two scenarios. One using his information and the second with the children.

The punishment for novice drivers is significantly reduced compared to a driver who has just been licensed. So, you may be able to pay more in insurance on your vehicle and sign the contract with your child’s name, which will contribute to their driving record. Therefore, as long as you are not involved in accidents shortly, this record can help reduce the insurance premium each year.

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