Key Takeaways
- The vehicle title holder is the legal owner and has the right to sell, trade, or dispose of the vehicle; the insurance holder is the person or entity the insurance company will pay if there is a claim.
- You can be listed on the insurance policy without owning the title, or own the title without being the primary insurance holder, depending on your state's rules and your insurance company's requirements.
- If someone else holds the title but you drive the vehicle regularly, you will usually need to be listed on the insurance policy as a driver, even if you are not the policyholder.
- Lenders and leasing companies often require themselves to be listed on the insurance policy as the lienholder or loss payee, which means they receive notice if the policy is cancelled.
- Mismatches between the title holder and insurance holder can delay or deny a claim, so both names should match your state's records and your insurance company's records.
The Difference Between Title Holder and Insurance Holder
The title holder is the person or entity whose name appears on the vehicle registration and ownership documents filed with your state's Department of Motor Vehicles (or equivalent). This person has the legal right to sell the vehicle, trade it in, modify it, or dispose of it. The title holder is also the person responsible for paying registration fees and property taxes on the vehicle.
The insurance holder is the person or entity whose name appears on the insurance policy as the policyholder. This is the person the insurance company will contact about the policy, send bills to, and pay if a covered claim is filed. The insurance holder may or may not be the same person as the title holder.
In most cases, the title holder and the insurance holder are the same person — the person who owns and drives the vehicle. But situations arise where they are different: a parent may hold the title while a child is listed as the primary driver on the insurance; a business may hold the title while an employee is the named policyholder; or a lender may require itself to be listed on the policy even though you hold the title.
When the Title Holder and Insurance Holder Must Match
Your state's insurance laws require that the person or entity with an insurable interest in the vehicle — meaning they would suffer a financial loss if the vehicle were damaged or destroyed — must be listed on the policy. In most cases, this means the title holder must be listed on the insurance policy, even if someone else is the primary policyholder.
If you own the title but do not drive the vehicle, you still need to be listed on the insurance policy, usually as the named insured or as an additional insured. If you drive a vehicle you do not own, you will usually need to be listed as a driver on the owner's policy, and in some cases as a named insured as well. Your insurance company can tell you what your state requires.
If a lender financed the vehicle purchase, the lender's name will appear on the title as a lienholder. The lender will also require itself to be listed on the insurance policy as the loss payee, which means the insurance company must notify the lender if the policy is cancelled and must include the lender's name on any claim payment for damage to the vehicle.
Adding Another Person to the Title
If you want another person to be listed as a co-owner on the title, you will need to file paperwork with your state's Department of Motor Vehicles. The process and cost vary by state. You will typically need to provide the current title, proof of ownership, and a form signed by both the current owner and the person being added.
Some states allow you to add a co-owner with survivorship rights, which means the vehicle automatically passes to the surviving co-owner if one owner dies. Other states do not recognize survivorship on vehicle titles, so the vehicle would go through probate. Check your state's DMV website or call your local office to learn what options are available and what forms you need.
Adding someone to the title is a permanent change to the ownership record and cannot be undone without filing additional paperwork. If you are considering adding someone to the title for insurance purposes or to give them access to the vehicle, adding them to the insurance policy instead may be simpler and more flexible.
Adding Another Person to the Insurance Policy
Adding another person to your insurance policy is simpler than adding them to the title. You can call your insurance company or log into your online account to add a driver, a named insured, or an additional insured. The insurance company will ask for the person's name, date of birth, driver's license number, and driving history.
If the person will be driving the vehicle regularly, they must be listed as a driver on the policy. If you do not list a regular driver, the insurance company may deny a claim if that person is involved in an accident. If the person will rarely or never drive the vehicle, they may not need to be listed as a driver, but if they have an insurable interest in the vehicle (for example, if they co-own it), they should be listed as a named insured or additional insured.
Adding someone to the insurance policy does not change who owns the vehicle or who has the legal right to sell it. It only determines who the insurance company will contact about the policy and who can file a claim. You can remove someone from the policy at any time by calling your insurance company.
What Happens If the Title and Insurance Do Not Match
If the name on the title does not match the name on the insurance policy, the insurance company may deny a claim or delay payment while they verify who owns the vehicle. This can happen if you recently changed your name, inherited a vehicle, or bought a vehicle from someone else and have not yet updated the title.
If you are involved in an accident and the insurance company discovers that the person driving the vehicle is not listed on the policy and is not the title holder, they may deny the claim entirely. This is why it is important to update both your title and your insurance policy whenever there is a change in ownership or whenever someone new will be driving the vehicle regularly.
If you are buying a used vehicle, make sure the seller transfers the title to you before you drive it away. Do not rely on the seller's insurance to cover you — you need your own policy with your name on it. If the seller has not yet transferred the title, ask them to do so at the DMV before you take possession of the vehicle.
Title Transfers and Insurance Updates
When you buy a vehicle, the seller must transfer the title to you by filing the appropriate paperwork with your state's DMV. This usually takes one to two weeks. During this time, you should have your own insurance policy in place with your name on it, even if the title has not yet been transferred. Most insurance companies will insure a vehicle you are purchasing before the title transfer is complete, as long as you can show proof of purchase.
When you sell a vehicle, you must remove yourself from the title by signing it over to the buyer. You should also contact your insurance company to remove the vehicle from your policy. If you do not remove the vehicle from your policy, you may continue to pay premiums for a vehicle you no longer own.
If you inherit a vehicle, the title will need to be transferred to you through your state's probate or succession process. Until the title is transferred, you should not drive the vehicle, and the previous owner's insurance policy should still cover it. Once you receive the title, you will need to obtain your own insurance policy before driving the vehicle.
Frequently Asked Questions
Can I insure a vehicle I do not own?
You can be listed on an insurance policy for a vehicle you do not own, but you must have an insurable interest — meaning you would suffer a financial loss if the vehicle were damaged. For example, if you regularly drive a family member's vehicle, you can be listed as a driver on their policy. If you do not have an insurable interest, the insurance company may deny a claim.
What if I buy a vehicle but the title has not transferred yet?
You can obtain an insurance policy for a vehicle you are purchasing before the title transfer is complete. Bring proof of purchase (the bill of sale or purchase agreement) to your insurance company. Once the title is transferred to you, update your insurance company with your new title information.
Do I need to be on the title if I am on the insurance policy?
Not necessarily. You can be listed on the insurance policy as a driver or additional insured without being on the title. However, if you have an insurable interest in the vehicle (for example, if you co-own it or if you financed it), you should be listed on the policy. Your insurance company can advise you on what your state requires.
What does it mean if a lender is listed as the loss payee?
The loss payee is the entity that receives notice if your insurance policy is cancelled and receives a portion of any claim payment for damage to the vehicle. If a lender financed your vehicle purchase, they will require themselves to be listed as the loss payee to protect their financial interest in the vehicle. This does not affect your coverage or your ability to file a claim.
Can I remove someone from the title without their permission?
No. Both the current title holder and any co-owner must sign paperwork to remove someone from the title. If someone refuses to sign, you may need to go through a legal process to remove them. Removing someone from the insurance policy is simpler — you can do it by calling your insurance company, as long as you are the policyholder.