When a driver does not own a car but needs to insure it, one option is to buy a non-owner's car insurance policy. If the person insuring the car lives in the same household as the owner, another option is to list the owner as a driver on the policy.
Many insurance companies are hesitant to insure a vehicle that the driver does not own. Because he does not own the car, carriers often hold that he does not have an insurable interest. The driver could damage the car, collect the damage payment and walk away without repairing the vehicle. Accordingly, most non-owner policies only offer liability coverage, which pays the medical expenses and damage for people injured in an accident but not for repairing the car. This type of coverage meets the financial responsibility law for drivers in most states.
For a driver who uses his parent's car, the best option is to have the parents list the driver on their policy if he lives at home. If the driver lives on his own but the car remains in the parent's name, the options become more difficult. One solution is to purchase the car.
While the process is difficult, it is important to be honest with the insurer. A driver who purchases a policy claiming to own a vehicle registered in another person's name sometimes finds that the policy does not provide any coverage in the event of an accident.