Insurable Interest Effect On Motorcar Insurance

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Insurance policies are not only meant for individuals who want to protect themselves or their properties from any possible dangers or losses, but also for other people and items. Insurable interest enters the stage, allowing one to insure a property owned by another entity.

Insurable interest is a vital requirement for insurance policies issued to protect an individual from financial loss should another person or item be lost or damaged. As long as the individual will not be subjected to financial loss, if any damages or losses happen, there is no insurable interest.

One’s insurable interest in another person’s car can be murky since there’s a chance that the policyholder will neglect to protect the car from getting damaged to make an insurance claim.


How One Can Have Insurable Interest in Another Vehicle

Because one’s interest is unclear when insuring another person’s car, it can prove challenging to insure the vehicle. However, it’s not impossible since there are plenty of legitimate reasons that one can have to have an insurable interest in the car.

People who are frequently driving a private vehicle that they do not own can apply for an insurance plan on the car if they are dependent on the vehicle for everyday transportation. The situation applies to students who usually drive their parents’ cars while they’re living away from them and those who regularly borrow their friend’s car.

People can also have an insurable interest in a car when it’s co-titled to them. A finance company may also have an insurable interest in a vehicle if they helped pay for the purchase.


Possible Complications with Car Insurance

An individual can have an insurable interest in a vehicle for various reasons. Still, there can be complications as insurable interest is dependent on the interpretation of the construction of the insurance contract.

Insurable interest is not necessarily dependent on the nature of the car’s ownership, but rather on an individual’s benefit on the insured vehicle. If the individual will suffer from the car’s damages or destruction, then the individual has an insurable interest on the property.

Parents who own a car and let their son or daughter use it as a principal operator are naturally considered the policyholders. In contrast, the principal operator gains an insurable interest in the vehicle as long as the principal operator continues to reside with their parents, and the car’s title is not transferred to the principal operator.

If the parents have transferred the title to the principal operator, and the new owner has moved out of their parents’ home, then the parents will not have any insurable interest in the vehicle. Even if the parents insured the car, because they no longer own the car, the new owner would not benefit from the insurance policy.


Remedy for Assured Motorcar Coverage

The car’s principal operator should get non-owner car insurance to ensure that the driver will still be protected with liability coverage to serve as extra protection in case they cause an accident. Non-owner car insurance usually covers only Personal Injury Protection and Uninsured/underinsured motoring coverage.

Not all insurance companies allow people to insure another person’s car for insurable interest even if they live together with the owner, which is why claiming non-owner car insurance must be done carefully. People will need to shop around and compare car insurance policies to ensure that they can have the right plan for the car.

Non-owner car insurance is an excellent fallback in case the driver is deemed not to have an insurable interest in the vehicle in question.

If you need to avail car insurance to benefit from insurable interest, then start comparing the different insurance policies available through our website at or contact us at 875 6677.



Author: erwin reyes

Erwin has a combined experience of more than 15 years in the car insurance industry in the Philippines and Australia. Loves cars and enjoys to sourcing out great deals for its clients