Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 20, 2020

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Key takeaways...

  • Car insurance policies may be transferable, but premiums are likely to change
  • Personal details such as driver history will be taken into consideration when determining car insurance rates
  • Insurance companies handle transferring insurance from one entity to another based on certain specific factors

There are various components that are transferable when you buy or sell a car. Car insurance is sometimes one of them. Insurance premiums take into consideration personal details, which is why premiums will likely change when being transferred.

The most common reason for a transference is when an individual buys or sells a car.

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Transferring Insurance

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Insurance is transferred based on the sale of a car. Most insurance companies allow the transfer to be done online or over the phone. The most important aspect to consider is the active dates of the policy.

You don’t want to mess up on the dates as this could result in a lapse of coverage.

A lapse of coverage could cost you more on your insurance or result in your being unable to file a claim if there is damage to your car.

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How Your Insurance Policy is Calculated

All insurance companies use the same factors to determine the cost of insurance. However, the cost of insurance varies from company to company based on the emphasis they put on certain factors.

Getting quotes from several companies and making comparisons on your own is very important.

The factors used to calculate insurance typically include:

  • Age
  • Gender
  • Year, make, and model of car
  • Driving history
  • Zip code
  • Level of coverage

If you transfer a vehicle to someone in your family, many of the factors stay the same. The factor that doesn’t stay the same is the safety record. It is for this reason that insurance premiums are going to change if they are transferred.

Similarly, if you purchase a new car and want to transfer your insurance policy from an old car to a new one, the only factor that will change will be the year, make, and model of the vehicle.

All of this history is critical when determining risk.

In addition to risk, some states also permit the use of your credit score to help determine the cost of insurance. This is when they will look at payment history and your overall credit score. Low credit scores can end up costing you more on your premiums.

Credit scores are individual and this is another reason why insurance companies will not allow you to transfer a policy from one person to another.

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What You Can Transfer

There are several things you can transfer when it comes to owning a car. You have the ability to transfer the tag as well as the title to another person. Both of these are done through the DMV.

Since car insurance involves several personal aspects, the premium itself cannot be transferred.

Instead, if you’re selling your car, you must cancel your policy and then the person who bought your car will need to get their own policy.

When you have insurance, you can choose to either update the policy with a new vehicle or you can cancel your policy entirely if you no longer own a vehicle.

If you don’t cancel your policy and instead update the policy with a new car, you transfer your insurance from the old car to the new car by providing the details of the new car to the insurance company.

You stay insured and you ensure that the policy is representative of the car that is now in your possession.

When you update your policy, it’s a good idea to get quotes from several insurance companies. The changes could result in getting a more affordable policy from another company.

What the Insurance Company Needs to Know if You Sell Your Car

If you choose to sell your car, either to another person or back to a dealership, your car insurance company needs to know.

There is nothing you have to do beyond letting the insurance company know that the title has been transferred. The insurance company will do all of the paperwork behind the scenes.

Similarly, the insurance that the dealership has is transferred to you once you complete the sale and call your insurance company with the details to update your policy.

Insurance will always have to be recalculated based on the new holder of the policy for a specific vehicle. There might also be the need to add more coverage.

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