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Things to Remember...
  • A title is the proof of who legally owns a vehicle
  • Motorists should check with their local Department of Motor Vehicles for specific local requirements regarding title transfers, registration, insurance requirements, and licensing
  • If you are paying on a loan for your vehicle, your loan company has the title to your car, as they are the legal owners
  • If you own your vehicle, you should be in possession of the title and keep it in a secure location
  • In most states, a title can be issued and transferred without proof that the vehicle is insured

The ins and outs of owning, driving, and insuring a vehicle can be quite confusing. To add to the confusion, these ins and outs can vary from state to state and even county to county.

However, not knowing and not following the laws regarding vehicle ownership and insurance can be quite consequential and even costly.

Having the legal and correct insurance coverages for your vehicle and your financial situation will save you money.

To reduce the cost of your insurance premiums, be sure to use an online auto insurance comparison calculator. Compare car insurance rates now by using our FREE tool above!

Defining the Steps and Terms of Car Ownership, Insurance, and Licensing

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When dealing with vehicle insurance and ownership, it is important to define each step in the process. Some steps are related or interconnected, and some are not.

Here are some important steps and terms to be aware of when buying, selling, insuring, or driving a vehicle:

Auto Title

A car title is an important legal document that states who owns a vehicle. In the same way, a deed proves who owns a piece of land or property, an auto title legally proves who owns a car.

  • If you are leasing your vehicle, the leasing company owns the vehicle and has the title
  • If you purchased your vehicle outright at the dealership, you should have been given the title
  • If you took out a loan to pay for your vehicle, the loan company will keep the title until your loan is paid in full. At that point, the title will be transferred to your name
  • If you purchased your vehicle from an individual, they should have signed the title over to you at the time of the purchase. A new title is then issued by the DMV

A title, simply put, proves ownership, but it does not insure the car or license the owner.

If you are in possession of the title for your car, you should keep it in a secure location, such as a fire-proof safe or a lock box.

Car Registration

All states require their residents to register their vehicles. Not doing so is illegal. If you have recently moved to a new state, you have a certain time period to register your vehicle in your new state.

You can learn about the requirements regarding car registration at your state’s DMV website.

When your vehicle is registered, you are paying the applicable state and county taxes, as well as complying with laws that help identify your vehicle. The amount you pay for your car registration will depend on what your state or county values it at.

Some areas also require you to have an inspection or emissions test each year or every few years in order to register your vehicle.

When registering your vehicle, you will likely need to bring your driver’s license, proof of insurance, and title. However, the documentation and requirements can vary from one state to the next.

Driver’s License

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A driver’s license is issued by the state where you reside. You are not required to have insurance, own a vehicle, or have a registered vehicle in order to obtain a driver’s license.

You will, however, need to show proper identification, such as a birth certificate and proof of residency.

To get a driver’s license, you will also be required to pass a written and practical test, as well as pay a fee and possibly pass an eye exam.

These requirements may vary between states. You can learn more about the requirements for your home state here.

Car Insurance

Car insurance protects you and other drivers on the road in the event of an accident or another unforeseen event. Almost every state requires their motorists to have some form of car insurance.

  • Liability is the most basic coverage and the most commonly required type of car insurance; it covers damages to other property and vehicles that you may cause
  • If you have a loan on your vehicle, your loan or lease company will most likely require you to purchase collision and comprehensive coverage
  • Some states also require bodily injury coverage, which pays for damages if you cause an accident where someone else is hurt or killed
  • Med pay is also required by some states and pays for medical bills in relation to a car accident

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Transferring a Title

Whether you purchased a vehicle from another party, received one from a relative, or are getting rid of one, transferring a title involves a lot of paperwork.

As requirements will be different from one state to the next, it is vitally important that you check your own local requirements before proceeding.

However, you should be prepared to head to the state agency that processes car titles and registrations. In most areas, this office is known as the Department of Motor Vehicles, or DMV for short.

When transferring the title, the person selling the vehicle will need to sign the title over to the buyer. Then the seller should provide the buyer with a bill of sale, clearly showing the purchase price.

In addition, you should be prepared to take the following with you to the DMV:

  • The vehicle’s current odometer reading
  • The Vehicle Identification Number, also known as the VIN (this should be included on the title and on the bill of sale)
  • Proof that the vehicle has been signed over to the person buying it
  • The bill of sale with purchase price

As the title strictly deals with who legally owns the vehicle, most states do not require you to prove that you have insurance on it or that you have a driver’s license.

You can expect to fill out additional paperwork for the title transfer at the DMV. The title transfer will be recorded and a new title will be reissued in your name.

As overwhelming and confusing as owning and driving a vehicle can be, the title is one of the most straightforward parts.

Since the title is simply a document proving who has legal ownership of the vehicle, drivers are not required to have or to show proof of car insurance in most states, in order to transfer a car’s title.

In addition, using an online car insurance rate calculator or comparison tool will ensure that you are getting the best premium available to you.

Enter your zip code in our FREE tool below to compare rates now!

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