Joint Car Insurance Policy Between Unmarried Couples

CB and I discussed the possibility of us combining our car insurance policies once we move in together. As it does with many unmarried couples, it took us some time and research (and discussions) to decide how we wanted to proceed. I actually couldn’t find too much information on joint car policy for unmarried couples, so I thought I’d share what I’ve learned from my insurance agent and other research here.  Disclaimer: I am not an insurance or legal professional, and everything I write here is what I’ve been told / researched on my own. I make no guarantees as to the information’s accuracy or completeness.

• Some insurance companies will allow unmarried couples to be on a joint car insurance policy. Some won’t.  For example, in California, Progressive permits unmarried couples to go on the same policy, whereas All State does not (I don’t know if domestic partners can have a joint policy with a company that does not allow unmarried couples a joint policy – but that’s something you should check if you are in a legal domestic partnership).

• Married couples will receive more car insurance discount than unmarried couples because they receive a “marriage discount” as well as a “multi-car discount”.  I am not sure about the financial impact of legal domestic partnership on car insurance.

• In California, the primary holder of the insurance is the Named Insured. The person (or persons) added on to that policy are Second Named Insured.  The Named Insured can unilaterally remove Second Named Insureds from the policy without informing or receiving permission from the Second Named Insured. In other states, Second Named Insureds may need to give permission before the Named Insured can take them off the policy. Make sure you understand what the requirements are for your state. It’s easy to imagine a scenario (after an unfriendly breakup, perhaps?) that quickly turns ugly.

• Some insurance companies may require that two people living at the same residence to be “rated drivers” on each others’ cars – i.e. that both parties can drive each other’s cars.  CB and I decided not to have a joint policy, but because we live at the same address, my insurance company will not cover CB if he drives my vehicle. CB is hence an “excluded driver” on my policy.

• If a driver on the insurance is at fault for an accident, the insurance company will pay out the damages up to the limit of the coverage. The victims can sue for amounts beyond what the insurance company paid – they can sue for the assets of the driver, then, if they so choose, they can go after the other insured person on the joint policy.  I don’t know how common or successful these suits are usually, but just the possibility of opening myself up to such liability is disconcerting.

The last reason is why CB and I decided not to combine our insurance policy. If he causes an accident or I cause an accident, we wouldn’t want the other person’s assets to be at risk of a lawsuit.  We have separate assets, but, well, you just never know.  That’s the reason why my parents insisted I get my own car insurance as soon as I graduated college – it was unwise to open their much-more-substantial-than-my assets to the risk of ME being sued.

If we were married, we would take steps to mitigate that risk (probably through the use of a much higher coverage / umbrella coverage).  But I don’t want to open ourselves up to the risk of liability (however slight) without a structure in place to mitigate it.