A friend of mine, “Kate”, has a friend, “Bob”, that bought a car. Since Bob was having trouble getting insurance at a reasonable price, Kate agreed to put the car under her insurance, and Bob would pay that share of the premiums. The insurance company was given the correct information regarding the owner of the car, but Kate has herself listed as the primary driver.
Is this legal? What happens if the insurance company finds out that Bob is the driver?
It might be considered fraud, and I would worry that they may withhold coverage on that basis if Bob has an accident. I would expect they’d cancel the policy if they felt they had been deceived, and Kate may then have her own problems getting insurance at a reasonable price.
That aside, if Bob is found at fault in an accident, Kate could face a significant premium increase or even cancellation. This would apply even if Bob had insurance. There’s more at risk when lending a car to someone than just wear and tear on the vehicle.
Do Kate & Bob reside in the same household? Are they married? Is bob listed as the primary driver on ANY car? There can be trouble if information has been witheld from the insurance company. How much trouble depends on how much and what kind of information, and Kate’s relationship with her insurer. More info if you have it, please.
No, they are not in the same household, nor are married. They used to be in a romantic relationship but they are no longer. I don’t know if Bob has any insurance of his own or not; he has some motorcycles, but I don’t know how they are insured.
Legal? Well, she lied on a legal contract, so it’s certainly not a good thing. The insurance company is likely to cancel the policy if they find out, and they might take further action. As Gary T said, if he has an accident, Kate and Bob could not only end up without insurance, but get sued both by the other driver and their own insurance company.
Well, it’s not likely their own insurance company will sue them. Highly not so in fact. I think perhaps the phrase you’re looking for is “press charges.”
But there are definitely grounds for denial of a claim and cancellation of this policy at best. Most importantly Kate has no insurable interest in the car. She’s not a titled owner and so is not responsible for damages caused by the car, nor is she entitled to any settlements for damages to the car for the same reason. She doesn’t depend on the car for her daily transportation. Basically, there is no reason for her to have the car insured in her name apart from deceiving an insurance company into accepting less compensation than they deserve for the risk.
It’s insurance fraud. I believe that’s a felony, but I could be mistaken. Bob should have taken the cost of insurance into consideration when he purchased the car. He has made it Kate’s problem now, and she’s the one commiting the fraudulent act against the insurance company. Like hell there’s no romantic involvement anymore! Bob’s giving it to her 3 ways from Sunday! She needs to cancel the policy ASAP and let Bob pony up the correct premium.
If the insurance company has been told that the legal owner of the car is Bob, I don’t see how they would agree to insure the car under the circumstances that have been given. I suspect that the real owner of the car was withheld from the insurer, or the car’s title was transferred to Kate (in name only) for the purposes of getting insurance coverage for Bob. That would smack of fraud.
Kate did give the correct ownership of the car, and there wasn’t any problem with that. I don’t think the insurance really cares who owns the car, but I’m pretty sure they want to know who is driving the car.
I misread the OP and thought that Kate owned the car. My previous post was based on that erroneous assumption, and I don’t know to what extent Bob’s owning the car changes the situation in the insurance company’s eyes. I wouldn’t have expected them to issue Kate a policy on a car she didn’t own. This goes beyond my limited knowledge of car insurance practices.
Insurance brokers will often do this in california, but typically if Kate co-owns the car.
Typical situation:
Bob - bad credit history.
Kate - good credit history.
They co-sign on the car loan with Kate being the primary owner(even though she has no interest in driving the car), the dealer will happily write something like “Fiancee” on the loan application even if it’s not true.
Then they get insurance together, with the insurance broker happily listing Kate as the primary driver to get the rate down even though that’s not true at all.
This is illegal for Kate, Bob, dealer and broker, but it’s not “highly illegal”. This sort of situation, if shit hit the fan most likely would never wind up in court. Rather, Kate’s credit and insurance premiums would have severe negative impact if Bob becomes a dead-beat or crashes the car.