Expert: Richard Hixenbaugh - 10/18/2011

Question
If a person buys a car and the owner of the car the person is buying has insurance does the insurance coverage end the moment the title is signed or does it end when the seller cancels the insurance? Thank you.

Answer
Hi Ray,

Although auto insurance covers the vehicle it is issued to a specific individual. When a titled is signed over to another person, ownership is transfered at that time.  The individual named in the policy no longer has an insurable interest in the vehicle and the insurance coverage ceases to exist. In order for the new owner to have insurance protection, they need to arrange for insurance coverage on the vehicle prior to taking possession of the vehicle. This is the reason that when you buy a car at a dealership you must provide proof of insurance before they will let you drive off the lot.

I hope this helps
Richard Hixenbaugh