Most of the time, car titles are pretty straight forward.  You own the car and your name is on the title.  You contact your insurance agent and add the vehicle to your Personal Auto Policy. Simple, right? 

But, life is not always that simple and there are many circumstances that come up routinely that can leave you financially exposed without the proper insurance coverage because of how the car is titled. When in doubt, remember to contact your American Insurance agent for advice.

• Related: Car titles - Do they affect business auto insurance coverage?

3 key concepts you need to keep in mind

1. Car titles are legal documents issued by the Department of Motor Vehicles of the State that lists the name(s) of the owners of the specific vehicle shown on the title. The titled owner of the vehicle can be held legally responsible for who operates the vehicle and the maintenance of the vehicle that may have contributed to the accident.  Often, after a serious accident, the driver and the titled owner(s) of the vehicle are named in lawsuits and must defend themselves.
2. You must have an “insurable interest” in a vehicle in order to insure it on your own Personal Auto Policy.  That means you are the titled owner of the vehicle or you are required to insure the vehicle under a contract like an auto rental or lease agreement.  As a point of law, you can’t collect insurance proceeds for the loss of something you don’t have any financial interest in or legal obligation to indemnify.
3. You may have ownership and your name on the title of many vehicles, but you must specifically declare and list every owned vehicle on your Personal Auto Policy or it is not insured for liability or physical damage. 

As a general rule, you never want to have your name on a car title unless you specifically insure it under your own Personal Auto Policy.

A common car title problem can expose you to uninsured loss

Anyone who is raising teenagers knows the challenge of helping them become responsible licensed drivers and helping them with dependable transportation.  The family cars are titled in the parents names and the teenagers are covered as “insured” members of the household.  But as they grow into legal adults there comes a time to move them out of the nest.  So, the question becomes…

When to transition grown children onto their own auto insurance policy? One recent caller said, "I gave my 20-year old son a car that is co-owned and co-titled in his name and my name. He lives independently now and took out his own auto insurance with minimum limits of liability. Is there a problem?"

ANSWER: Yes, there is a problem. Make sure you are not a still a titled owner on any vehicle that is not insured on your own Personal Auto Policy.  You could be sued as an owner and would not be insured under your son’s policy or your own auto policy for that vehicle.  Your son’s minimum auto liability limits may not be enough to settle his claim and your own assets could be exposed. Re-title your son’s vehicle to take your name off the title.

Our agents routinely get other questions that are affected by how a car is titled like…

• Can unrelated people who live together insure their vehicles together?
• Can I buy a car for someone else to use and title it in my own name?

When planning to buy a car, some consideration should be given to how a car will be titled and insured. When in doubt, remember to call your American Insurance agent for advice.  Contact us and we can find a solution that provides you the protection you need. 

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