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Ask Anne Marie: I lent money to a relative to buy a new vehicle and kept the car in my name. Am I liable?

Every week we’ll highlight the best question sent to our resident insurance expert, Anne Marie Thomas. This week’s question comes from Gisele, who has lent money to a relative to buy a car and the car is in her name.

“I lent money to a relative to buy a vehicle but keep the vehicle in my name for reasons of collateral. I am not the primary driver or even a secondary. Do I share any liability for this vehicle for which I need to be insured or is this the primary driver’s responsibility? Of course, I would require proof of insurance from the relative,” Gisele asks.

This is not an uncommon situation. When people help out a relative or friend in this way, they often choose to keep the car in their name until the money has been repaid. But, there’s more to it than just being the person listed as the car’s owner, as Anne Marie explains.

“Since you are the registered owner of the vehicle, you would be liable for loss or damage caused by the vehicle. Because an insurance policy is a contract between the registered owner of the vehicle and the insurance company, the auto insurance policy must be in your name. Your relative cannot insure the vehicle as they have no legal interest as it is registered to you. You can add your relative as a driver,” she says.

Basically, if you’re the registered owner of a vehicle you can expect to also be the policyholder for the auto insurance needed to drive the car.

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