If you are thinking about insuring your sister’s car (as if it was your own) while she will continue to be the vehicle’s primary driver, this is a very bad idea.
Insuring someone else’s car in your own name to obtain lower rates is termed “fronting” and is normally illegal.
An insurance company has the right to know who owns the car, the car’s primary driver, and the car’s garage location. Insurers use this information, as well as other items, to determine if they should take you on as a risk and issue a policy. They also use these as rating factors to calculate your premium amount.
If you are untruthful with your insurer about any information because the valid information would cause your car insurance company to refuse you a policy or charge you a higher rate. In that case, this can be considered material misrepresentation, a form of insurance fraud.
By misrepresenting the facts, you may be able to get lower car insurance rates for your sister’s car, but the coverages probably won’t be there if there is a car accident. Most car insurance policies include a general provision that excludes coverage for fraud or misrepresentation.
State laws differ regarding what happens if you are found to have misrepresented facts. Canceling your policy (possibly back to the effective date) is one outcome and denial of claims is another. Depending upon state laws you could also face charges of insurance fraud.
While it may save some money to insure your sister’s car, it is unwise to do because the ramifications are severe.
Do I have to list my sister as a driver on my policy?
If your sister is driving any car in your household regularly, then yes, she would normally need to be listed as a driver on your policy to be properly covered. If she has a bad driving record, then this could make your rates rise.
Your sister needs to get her own car insurance policy. Even with a bad driving record, or other issues, your sister should be able to shop around for car insurance and find a policy for her needs. She can start here with a free auto insurance quote online with CarInsurance.com.
— Michelle Megna contributed to this story.