Is it ok for my friend to insure unpaid car under her name and her insurance?

Question

I'm moving and can't keep the car. I still owe on the car, got about 2 years of payments left. My friend will buy the car from us once she gets a loan. She has the car insured with full coverage through her insurance and is under her name since she's been driving the car for awhile. I haven't been able to drive it since my surgery 6 months ago. Does the car need to be insured under my name since the car is not paid off?

Answer 1

I don't think so.

If your friend is covered under a policy in her name, the ownership of the car is irrelevant. If you or she has any doubt, just call the insurance company and explain the situation, but I'm sure they will be happy as long as your friend has paid, or is up to date with, the premium. After all, even if you had insurance yourself, the car is still under a loan agreement. On the other hand, if you owned the car, your friend could still insure herself to drive it on her own policy without you having insurance.

I don't think the legal ownership of the car matters, as long as the insurance policy is valid, which it appears to be.

Answer 2

You will have to ask the loan compay.  They should be only concerned that the car is insured but you should ask them.  Keep in mind that if the insurance lapses for some reason and an accident happens, YOU will be responsible for everything since it is still your car.  What you are doing is not wise.

Answer 3

Hi!! Surely the best way would be for the new owner to take over the rest of the repayments rather that raise a loan elsewhere. Have you explored this possibility with your loan company?  

If she is buying the car from you with a loan then when you are paid will it be enough to pay off the loan?.

I do not see any real problem here.