# Insuring a Non-Existent Car: Illegal? **URL:** \ **Category:** Factual Questions\ **Created:** [November 12, 2004, 10:43pm UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468 "2004-11-12T22:43:23Z")\ **Posts on this page:** 14\ **Page:** 1
**Author:** ![HeyHomie](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/heyhomie/32/207_2.png) [@HeyHomie](https://boards.straightdope.com/u/HeyHomie)\ **Post date:** [November 12, 2004, 10:43pm UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/1 "2004-11-12T22:43:23Z")
My insurance company gives me a discount for insuring two or more vehicles with them. Full coverage on the 2001 Chev Tracker; minimum liability on the 1993 Geo Metro. However, the Metro now sits in a junkyard, for reasons that I won’t go into now. So I got an on-line quote from [myinsurancecompany.com](http://myinsurancecompany.com), and discovered to my horror that removing the Metro would cause my rates to _increase_, to the tune of about $1 per month, due to the loss of the multi-vehicle discount. In an attempt to avoid making any hasty decisions, I decided not to remove the Metro. So now I’m insuring a car that isn’t mine, and that is very likely to be recycled into scrap metal within the next few weeks. The word “fraud” is floating around in my head. However, I don’t really see what crime I’m comitting. Intuition tells me that, as long as I pay the premiums, I could insure George W Bush’s car for all my insurance company cares. So, yeah, am I breaking the law? This is in Illinois, in case you don’t read user profiles. ---
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [November 12, 2004, 10:53pm UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/2 "2004-11-12T22:53:41Z")
I can’t answer your question, but I am curious as to whether you’re talking Liability, Comp, both, or… ? ---
**Author:** ![gotpasswords](https://avatars.discourse-cdn.com/v4/letter/g/c57346/32.png) [@gotpasswords](https://boards.straightdope.com/u/gotpasswords)\ **Post date:** [November 12, 2004, 10:57pm UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/3 "2004-11-12T22:57:12Z")
Assuming you signed the pink over to the scrap yard, you no longer own the car, so yep, it’d be a pretty clear-cut case of fraud. Is it really worth saving $12 a year to even contemplate insurance fraud? ---
**Author:** ![Danalan](https://avatars.discourse-cdn.com/v4/letter/d/76d3ee/32.png) [@Danalan](https://boards.straightdope.com/u/Danalan)\ **Post date:** [November 12, 2004, 11:26pm UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/4 "2004-11-12T23:26:09Z")
I agree that this is fraud – the details of multi-car discounts usually require all cars to be registered to the same household. That said, I think you should consider getting another cheap car to carry minimum insurance on. In many cases you will save money overall by getting the discount. The trick is to find the car with the lowest insurance cost. The [Highway Loss Data Institute](http://www.carsafety.org) has the data needed to make a decision about a particular car. Me, I like having a pickup around for when I need to haul something. ---
**Author:** ![ultrafilter](https://avatars.discourse-cdn.com/v4/letter/u/3d9bf3/32.png) [@ultrafilter](https://boards.straightdope.com/u/ultrafilter)\ **Post date:** [November 12, 2004, 11:29pm UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/5 "2004-11-12T23:29:20Z")
For $1/month, play it safe. ---
**Author:** ![GorillaMan](https://avatars.discourse-cdn.com/v4/letter/g/50afbb/32.png) [@GorillaMan](https://boards.straightdope.com/u/GorillaMan)\ **Post date:** [November 12, 2004, 11:37pm UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/6 "2004-11-12T23:37:46Z")
Lying on an insurance claim isn’t fraudulent. Knowingly giving incorrect information to obtain an insurance policy, however…and _claiming_ on such a policy…you get the idea And when you sign the form for any insurance whatsoever, I bet there’s a section which says “everything above blah is true”, and there’s a section above that which says “all the cars are roadworhy to the best of my knowledge”. ---
**Author:** ![Inigo\_Montoya](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/inigo_montoya/32/124_2.png) [@Inigo\_Montoya](https://boards.straightdope.com/u/Inigo_Montoya)\ **Post date:** [November 13, 2004, 12:12am UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/7 "2004-11-13T00:12:22Z")
It’s called a paper car. It’s a form of insurance fraud, and it’s used widely in various scams. You don’t want to be even suspected of being associated with the organizations that proliferate paper cars. At best you’re putting your insurance company in an awkward position for collecting premiums on a car that they can never pay you for. Also, the discount is based on an actuarial statistic indicating a lower probability of claims on a multiple car household. By falsely qualifying yourself for the discount, you are not paying premium commensurate to your exposure–so other folks are having to pay more to keep things equal. Theoretically. You yourself are not making that much of an impact on things, but neither is any individual single SUV driver or elephant poacher making much of an impact on the planet. So now you know what you are. Don’t do this anymore. 🙂 ---
**Author:** ![Inigo\_Montoya](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/inigo_montoya/32/124_2.png) [@Inigo\_Montoya](https://boards.straightdope.com/u/Inigo_Montoya)\ **Post date:** [November 13, 2004, 12:16am UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/8 "2004-11-13T00:16:41Z")
> [@GorillaMan](#): > > And when you sign the form for any insurance whatsoever, I bet there’s a section which says “everything above blah is true”, and there’s a section above that which says “all the cars are roadworhy to the best of my knowledge”. Well, actually, it’s more like: It is unlawful to knowingly provide false, incomplete, or mis- leading facts or information to an insurance company for the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of insurance, and civil damages. Any insurance company or agent of an insur- ance company who knowingly provides false, incomplete, or mis- leading facts or information to a policyholder or claimant for the purpose of defrauding or attempting to defraud the policy- holder or claimant with regard to a settlement or award payable from insurance proceeds shall be reported to the [STATE] Division of Insurance within the department of regulatory agencies. ---
**Author:** ![Spoons](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spoons/32/3141_2.png) [@Spoons](https://boards.straightdope.com/u/Spoons)\ **Post date:** [November 13, 2004, 12:31am UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/9 "2004-11-13T00:31:57Z")
On preview, **Inigo** said everything better, but I’ll post this for what it’s worth. > [@HeyHomie](#): > > Intuition tells me that, as long as I pay the premiums, I could insure George W Bush’s car for all my insurance company cares. Actually, you couldn’t. Assuming that you are not a family member or friend of George W. Bush, you have no insurable interest in his car; you wouldn’t stand to lose anything financially if Bush (or anybody he designates as driver) has an accident while driving his car. No insurer should or would allow you to take out a policy on a car you have no insurable interest in. Similarly, if title to the Metro is held by the junkyard (you did say “now I’m insuring a car that isn’t mine,” so I’m assuming you signed it over to them), you no longer have an insurable interest. You cannot insure the Metro. If you do, then you’re not doing business in the spirit of “utmost good faith,” which insurers rely on you to do. If they find that you’re not, they can do such things as cancel all your policies immediately, or refuse to renew your policies when they expire. (Or worse, as **Inigo** points out.) I can’t comment on Illinois insurance law, but it seems to me that you can do one of two things to stay on your insurer’s good side: either remove the Metro from your policy (and pay the extra $12 a year, which really isn’t much), or buy another cheap car so you can get the discount. If you choose the latter option, be up front with your insurer–tell them that you sold the Metro and bought a (say) Firefly on which you want to carry the minimum. ---
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [November 13, 2004, 12:43am UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/10 "2004-11-13T00:43:35Z")
> [@Spoons](#): > > On preview, **Inigo** said everything better, but I’ll post this for what it’s worth. > > Actually, you couldn’t. Assuming that you are not a family member or friend of George W. Bush, you have no insurable interest in his car; you wouldn’t stand to lose anything financially if Bush (or anybody he designates as driver) has an accident while driving his car. No insurer should or would allow you to take out a policy on a car you have no insurable interest in. Could you buy a policy on George W. Bush’s car if you made sure he was named as the beneficiary? ---
**Author:** ![Inigo\_Montoya](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/inigo_montoya/32/124_2.png) [@Inigo\_Montoya](https://boards.straightdope.com/u/Inigo_Montoya)\ **Post date:** [November 13, 2004, 1:33am UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/11 "2004-11-13T01:33:09Z")
> [@Jonathan Woodall](#): > > Could you buy a policy on George W. Bush’s car if you made sure he was named as the beneficiary? Well, there’s no restriction on who pays the premium (well, the AGENT/BROKER is not supposed to pay the premiums, but that’s a different thing altogether), only on who is a named insured. The named insured is restricted to whomever has an insurable interest–who would suffer financially in the event of a loss. That’s gonna be OWNERS and BANKS 99% of the time. Oh yeah…and with Personal Home & Auto insurance, only one policy per house/car is allowed. You can’t insure the same car multiple times and collect from multiple companies for the same loss…not without getting the F-word thrown at you. ---
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [November 13, 2004, 3:37pm UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/12 "2004-11-13T15:37:57Z")
> [@Inigo Montoya](#): > > Oh yeah…and with Personal Home & Auto insurance, only one policy per house/car is allowed. You can’t insure the same car multiple times and collect from multiple companies for the same loss…not without getting the F-word thrown at you. So if I insured the George W Mobile, and George W already had it insured, and he drove it into a tree, he could file a claim on it with _EITHER_ the policy I got him for his birthday, or with his own insurance company, but not both, right? The fraud would be FILING A CLAIM on the second policy, not having the second policy, right? ---
**Author:** ![Inigo\_Montoya](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/inigo_montoya/32/124_2.png) [@Inigo\_Montoya](https://boards.straightdope.com/u/Inigo_Montoya)\ **Post date:** [November 13, 2004, 10:26pm UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/13 "2004-11-13T22:26:03Z")
Correct. ---
**Author:** ![BrotherCadfael](https://avatars.discourse-cdn.com/v4/letter/b/977dab/32.png) [@BrotherCadfael](https://boards.straightdope.com/u/BrotherCadfael)\ **Post date:** [November 13, 2004, 11:00pm UTC](https://boards.straightdope.com/t/insuring-a-non-existent-car-illegal/274468/14 "2004-11-13T23:00:38Z")
> [@Spoons](#): > > If you choose the latter option, be up front with your insurer–tell them that you sold the Metro and bought a (say) Firefly on which you want to carry the minimum. I want a Firefly!!! Especially if it comes with its own Kaylee…