Did you know that a lot of insurance carriers are getting more particular about the fact that if you insure a vehicle that you have to be the name on the title of the vehicle? What we’re seeing that this effect impacts a lot of people specifically if you have maybe a family member co-signed for a vehicle.
Who Needs A Cosigner?
A Cosigner is typically required when someone who has not credit or who does not have strong credit takes out a loan. A cosigner on an auto loan agrees to take full legal responsibility for repaying the loan if you can’t pay it back. Having a cosigner for a car gives a lender extra assurances that the loan will be repaid.
Why Does The Insurance Company Care About A Cosigner?
When someone cosigns for a loan on the vehicle they are taking financial responsibility for the payments on that vehicle. The presence of a cosigner is to have a backup if the primary person does not make the payments. This also means that they have legal rights to the vehicle if the payments are not made but it also means (from a legal standpoint) that they are also accepting legal responsibility for the vehicle and anything that happens to or with the vehicle. That can get a little confusing but ultimately it means that the cosigner is responsible as well as the primary owner for what happens in that car and to that car.
A Cosigner’s Rights To Repair Physical Damage On A Vehicle
Let’s look at it this way…if you have a vehicle that is sitting outside and is in a hall storm. That vehicle is no longer worth the money it was prior to the hail storm unless it is repaired. The cosigner has every right to expect that vehicle to be put back into the condition it was in prior to the storm to protect the co-signer’s investment if a loan is still in place on that vehicle. Therefore, the law and the insurance company says that the primary vehicle owner AND the cosigner has the right to make a claim on the vehicle to get it repaired.
Another example is that if the vehicle is in an accident, the co-signer is responsible for the payments on the vehicle just as much as the primary loan holder and thus an make a claim on the vehicle if it is damaged.
The cosigner also has legal rights to drive the vehicle if needed and thus has legal rights to the vehicle as well.
A Cosigner’s Legal Responsibility With A Vehicle
One thing most people don’t think about..is that a co-signer can also be held liable for what happens with that vehicle. If a driver causes an accident or if the vehicle causes injury to other people, the cosigner can be named in a lawsuit by the plaintiffs. In that situation, the insurance company would respond with the insurance policy in place and defend the vehicle operator and the legal owners and co-signers of the vehicle.
What Does This All Mean For The Insurance Carrier?
Great question!! The insurance carrier recognizes and there is legal precedence for the situation in which one person has insurance and someone else is a cosigner and something happens and the insurance company is then defending or paying out for the actions/responsibilities of more than just the listed person on the policy. This typically means that the “risk” on the policy is not being charged for accurately. Insurance is about “risk” what is the risk, who would we have to defend or pay out a claim on if something happened. Understanding those risks and rating a policy premium accuratelly for that risk is what an insurance carrier does…therefore, the insurance carriers are getting focused on understanding what drivers have access to vehicles and making sure they all have insurance and this extends to vehicle ownership as well.
Give us a call and we can answer all your insurance questions to make sure you have the best coverage for your insurance needs. (972) 964-4825