Car insurance for someone who doesn't drive
June 10, 2014 2:25 PM   Subscribe

My mother wants to give me her car so I can insure it for her - is this insurance fraud?

I know you're not my insurance agent or my lawyer. I will be consulting with my insurance agent shortly, but I wanted to get an idea of possible issues before I call.

My mother is elderly, legally blind and no longer has a driver's licence. But she does have a car, that she has other people drive her around in - sometimes a neighbor, sometimes a person specifically hired to drive her, and sometimes relatives visiting from out of town.

She went to renew her insurance and was told that since she no longer drives, the company won't insure the car. I told her to just sell the car, but she is totally unwilling to do that. She wants to transfer it to me (say, sell it to me for $1) and have me insure it under my name and then she can continue to use it as she has been. She would pay me for the insurance charges as well as any costs involved in transferring the title.

It's a 2010 Mazda (I don't know what model.)
We're in New York.

I don't have any problem doing this for her if it's legal, but is there an additional down side I'm not seeing?
posted by chocolatepeanutbuttercup to Travel & Transportation (17 answers total)
If you insure the car with yourself as the listed driver but you basically never drive the car, your insurance company may post-claim underwrite the insurance away if someone else gets into a serious crash in it.

That said, the circumstances you describe are not unusual for elderly people and most insurance companies are prepared to deal with them. It's likely that your mother could find an insurance company, though possibly not her current one, that will insure the car with her specifically listed as an excluded driver on the policy and her most frequent drivers listed as included drivers on the policy.

It is possible to set this up, and your insurance agent should be able to help you get it set up, just don't try to hide the facts of the situation from them and pretend you're actually legit buying the car for your own use, because that may bite you in the ass if you ever actually need that insurance.
posted by jacquilynne at 2:40 PM on June 10, 2014 [11 favorites]

The downside is you would be legally responsible for a car you don't control. Any parking tickets or camera tickets would go to you. If the car is in an accident, you'll be the one dealing with the insurance company and they probably will not be happy about the fact that the car is driven exclusively by people who are not on your policy.
posted by martinX's bellbottoms at 2:40 PM on June 10, 2014 [6 favorites]

There are ways to insure a car you own for others to drive it, but you'll need to maybe sit with her on the phone and talk to her current company as well as some others. Or you may want to do it the old fashioned way and find an insurance broker you can sit down with who will gather up multiple options for you.

A possibly inapplicable anecdote: a friend of mine was dealing with an elderly parent with mid-stage dementia, and one of the manifestations of her disease was an absolute insistence that other people drive her around in her own car (I'm sure because it was a familiar environment) instead of the drivers' own cars, but then she would terrorize them about imaginary damage to her car. The car needed to be gotten rid of, it was just making life too hard for everyone who was trying to help.
posted by Lyn Never at 2:47 PM on June 10, 2014 [1 favorite]

Beware of lying to the insurance company in any form, whether verbally or in the documents you sign. IANYL of course, but misrepresentation in the formation of a contract can make said contract unenforceable, in just about every state. Result: bad thing happens to her in the car, but no insurance coverage because the contract is based on a lie.

And yes, lying to the company could be a crime too. Depends on the law and practice in your jurisdiction.

Bottom line is, I wouldn't do it. What would make more sense is for your mom to hire someone to drive her who has their OWN insured car. And if you are in NYC, what would make the most sense of all is public transportation/taxis.
posted by bearwife at 2:50 PM on June 10, 2014 [3 favorites]

(say, sell it to me for $1)

I'm going through this with a friends parent who wanted to sign a vehicle over to me, but DON'T do that, or do it as a gift. The process is a goddamn nightmare. Say that you paid like $500 for it. This is a hassle in multiple states, i've checked around/tried other ways of dealing with it. If you mark it as $1 or gift you have to go through this whole valuation hassle and then pay sales tax on whatever amount they decide. Or some close variation on that depending on the state(i've seen florida, WA, and oregon).

As for insurance, i like the broker idea. Insurance companies get really annoyed if they have to insure a car and then deal with anything if the person on the policy wasn't the driver. I just dealt with this. They will likely cover it if you have a plausible story that involved like, you driving it if it was in her name and you're related but get really testy if it's anyone beyond a spouse or relative. Especially if you have to call them more than once.

It's better to ask an expert and find a plan for this sort of thing than be told your covered until something happens and you're not.

I'm not saying someone driving her own vehicle is necessarily a bad plan. People seem to always assume NY = NYC, it might be somewhere where anything else is fairly impractical or unworkable for various reasons. But while transferring the car shouldn't be that hard or that bad of an idea, insuring it needs to be handled carefully.
posted by emptythought at 2:52 PM on June 10, 2014 [3 favorites]

I have both bought and sold cars for $1. It was in Georgia. It was not a hassle. So that may be a state by state thing. Call your DMV and find out about that piece.

I have been trying to google up info. I worked in insurance but it was not car insurance.

It may not be fraud for her to sell the car to you for $1 and let her still use it. But, if possible, first try to find insurance in her name that fits her situation before you go that route. Only go that route if you absolutely cannot find insurance for her situation currently.

I did find an article on Non-owner Insurance which might be slightly helpful. So far, I am not finding anything about the specific situation you describe. I don't even know what to call it. Searching for "chauffeur insurance" turns up insurance for professional drivers, not insurance for "I have a friend drive me to the store in my own car."
posted by Michele in California at 3:26 PM on June 10, 2014

If she sells you the car, and you insure it, you will be the person insured to drive the car. Obviously people fudge around with this from time to time -- who hasn't let a friend drive for a while on a road trip? -- but generally you can't assume that other drivers will be covered under your insurance policy when driving this car. If anything were to happen, you would be liable.

If you are the person who mostly drives her around, this is a perfect solution. Insurance doesn't care where the car is parked or who gets to pick the radio station. You're the driver, you're technically the owner, everything looks good.

If other people more frequently drive your mother, I would not do this.
posted by Sara C. at 3:29 PM on June 10, 2014

There is no reason to sell a car for $1. The IRS would still view it as a gift. So just gift the thing.

Fraud would come in if you claim to be the primary driver of the car but are not.

Frankly, I wouldn't touch this situation with a ten foot pole.
posted by Justinian at 3:29 PM on June 10, 2014

This is not fraud unless you lie to the insurance company in some way.

However, that doesn't mean that the insurance will cover the other drivers. Some policies will, some will only under certain circumstances, some won't at all. You may have to pay extra.

The only way to know is to talk to your insurance company. Present this exact scenario to them, and ask.
posted by zennie at 3:39 PM on June 10, 2014

(I realize this is your mother so that might not be an option. You should ask the insurance agent how to handle things. He or she may know of insurance types which are appropriate.)
posted by Justinian at 3:40 PM on June 10, 2014

Thanks for the answers - the problem is a lot clearer in my mind now. I think an insurance broker is the way to go.
posted by chocolatepeanutbuttercup at 3:53 PM on June 10, 2014

The process is a goddamn nightmare.

This was not at all my experience. I've done this a few times in various states. There are costs associated with it. I think the whole "Sell it for $1" harkens back to the days when you might pay tax on what you paid for a car and not what ti was worth. So emptythought is right in that you will need to pay taxes on the car both for the value of the car when you purchase it and for the annual excise taxes.

There are specific rules about who is and isn't allowed/authorized to drive a car that belongs to someone else and the insurance people will understand that and will probably be fine with whatever the situation is. It may also be possible that a different insurance agent might be able to insure you to drive your mother's car even if it doesn't belong to you. Different states have widely different rules about this sort of thing.

The problems I could forsee are that you buy the car, your mom hangs on to it, someone drives her around in it, there is an accident that is costly (the example my mom always used was "suppose you kill some family breadwinner") and more than insurance will pay. You personally could be on the hook for some costs for an accident you were in no way involved with and nit might make it more expensive for you to get insurance in the future. It's really a worst-case scenario, but one you should be mindful of.
posted by jessamyn at 4:15 PM on June 10, 2014

Insurance doesn't care where the car is parked

False, they very much do care where it's parked. My premiums nearly doubled when I moved from a very safe zip code to one of the worst zip codes in the city, due to the increased risk of theft and damage. Nothing had changed on my policy except my zip code. Like other answers said, you don't want to lie because it can bite you in the ass after the fact.
posted by desjardins at 4:45 PM on June 10, 2014 [2 favorites]

Are you sure you need insurance? Usually your own insurance covers you when driving other people's cars (liability anyway), so maybe the drivers' insurance is enough?
posted by flimflam at 7:27 PM on June 10, 2014

False, they very much do care where it's parked. My premiums nearly doubled when I moved from a very safe zip code to one of the worst zip codes in the city, due to the increased risk of theft and damage.

My point is that if the OP owns the car, but it lives at his mother's house and it's primarily used so that he can drive his mother around, that's absolutely OK per the insurance company. If he owns it, and he drives it, there's no fraud.
posted by Sara C. at 7:30 PM on June 10, 2014

For future reference in case someone else is searching for an answer: I called around to some brokers and found her a policy that will exclude her as a driver and instead list her hired driver as the primary driver of record. Thanks for your help, everyone.
posted by chocolatepeanutbuttercup at 4:24 PM on June 11, 2014 [3 favorites]

Be sure to check with multiple insurance companies to see, if none of them want to insure the car while it's under your mother's name.
I know of an elderly couple who owns a car, but pays someone to drive them to doctors appointments and such.
posted by WizKid at 2:27 PM on June 12, 2014

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