We talk a lot about the Montana LLC registration program and the myriad benefits you have when you use it, especially saving money on sales tax (Montana has no sales taxes). We feel it is extremely important to keep everyone in the loop about everything about the process, and insurance is no exception. Since the vehicle is being registered to an out-of-state business entity rather than an individual, there may be some insurance specifics that you should be aware of. 

The most important thing to remember is to be honest and transparent with your insurance agent about your actions. If you haven’t been honest and you get in an accident, or the vehicle is destroyed in some other way (such as a natural disaster), the insurance company may reject the claim entirely if they determine that you were attempting to defraud them.   

Real quick: we are not attorneys and this is not legal advice, we are just enthusiasts trying to clear the air on insuring vehicles that are owned by Montana LLCs.

You Live In One State, But Your Vehicle Has Montana Plates. What Next?

This is sort of the entire matter: you live in State X, but your car is wearing Montana license plates. What exactly is your insurance going to think or do about this? 

Well, the first thing to do is just to ask your agent honestly how they view this. Nothing is illegal about having an LLC in Montana and operating a vehicle that way - just stay on top of your area's laws and rules on the matter - but that does not always translate to insurance coverage. Your agent is the local expert on your insurance policy and how it will be affected. 

So, honestly, you should have this call with them before you are in the situation. If you think you will be buying a vehicle and want to go through our Montana LLC registration program, or especially if you’re setting everything up yourself, call your insurance agent beforehand and find out precisely what will happen to your policy. Will they cover it? Does it need anything extra? Are there going to be any unexpected pitfalls in doing this?

It is impossible for us to tell you anything about how your insurance will react to an out-of-state vehicle registered at your domicile. You need to ask the question yourself, and if you don’t like the answer, consult a second opinion. We do have a few trusted advisors in the insurance world who we know give straight advice, so start there if your search broadens beyond your current insurance company.

“I’ll Just Sue Their A$$”

This was an interesting take that we heard on a recent video by a non-Montana attorney. The argument's premise was that if you filed an insurance claim on the vehicle and the insurance company failed to pay up because you have a Montana plate on a vehicle that does not reside in Montana, you would simply sue the insurance provider. 

This maybe makes sense on the surface…until you think about it for at least five minutes. 

Look, insurance companies do not make their money by paying out claims. They make money by collecting premiums. Obviously, there is a lot more to it than this. Still, there is a huge pool of money collected from premiums, and they have metrics to determine - based on the laws of averages - how often vehicles are wrecked or damaged, how much they cost to cover on average, etc. 

We aren’t trying to bash the industry, as it is an extremely necessary one. But the truth is that they will challenge questionable claims, especially if they smell out fraud at all. 

So, there is undoubtedly an element of truth in the assessment that they may not be altogether friendly towards an out-of-state tag on a vehicle housed in your domicile state. 

This is a case where you need to read through your policy carefully. If it states something to the effect that the vehicle must reside in the state where it is registered (or something along those lines), suing them won’t matter. It probably won’t anyway; insurance companies get sued constantly. They prepare for war every day, and with this knowledge under your belt, so can you.

False Statements On Residence 

This will be the tool that insurance will use to get out of paying a claim. When a claim is received, be sure that it will be reviewed with a microscope, especially for an expensive vehicle. It is one thing to total a 2011 Chevy Equinox. That car isn’t raising many eyebrows. 

Filing a claim on a $250,000 sports car is another thing entirely. 

So yes, they will look at the police reports. They will look at witness statements. And just because something in itself isn’t explicitly unlawful doesn’t mean that it won’t red flag the whole thing. 

If the supercar traces back to a Montana plate and an LLC ownership, even if it is not expressly prohibited, it will raise some eyebrows. It may not be illegal, but they will start digging to find anything else that might be questionable or would constitute fraud and nullify the claim.

I want to make it extremely clear again that we are not attorneys, just enthusiasts trying to clear the air.

If The Car Is Registered Under An LLC, Would It Really Be Insured Under A Personal Policy?

So, here is the million-dollar question: if you own and register your vehicle under an LLC, would you insure it under a commercial or personal policy?

According to Progressive, it depends on who owns the vehicle and what it is used for. If an LLC owns the vehicle, it is technically owned by a business, even if only on paper. The chances are that you will need to talk to your insurance agency about getting it put on a commercial policy. 

This does make a lot of sense. The LLC owns the vehicle, which is the truth. We are not insurance agents here, so the best we can offer is for you to ask your insurance provider what they think about it. They should give you the best information for your situation. It may be a commercial insurance policy to keep you legal, or a personal policy may cover it. Every company is different.

The main thing is to be COMPLETELY TRANSPARENT with your agent. Tell them precisely what you are doing. If it’s under an LLC, tell them that and ask how to go about it. This is another reason we recommend a shortlist of insurance companies – we know those specific companies have dealt with LLCs owning vehicles countless times before.

Is This Legal?

Your biggest concern about legality is your honesty when you get a policy. If you are dishonest about what you intend to do, don’t expect any mercy if you need to file a claim. 

You are often better off having them deny your policy because of what you are doing - and having to shop around to find a policy that will support you - than lying on your request and getting caught. 

Because guess who will get stuck holding the bag? You will. You will get hung out to dry with all repairs PLUS other damages from the other party. Maybe medical bills, too. Is it really worth going bankrupt because you cheaped out and lied on your insurance application? Not a chance. 

Be honest about it every step of the way. Let them turn you away when you explain why an LLC in Montana owns it. Someone out there will insure you legitimately, so find them. But don’t be dishonest because it will come back and bite you on the rumpus. 

Our Recommendations 

We have been doing this for a long time and have made connections in the industry. Insurance is one thing you cannot afford to skimp on, so we have compiled a list of our recommended partners in the insurance industry.

If your insurance company is okay with what you want to do, great! But there are other options if you run into a wall (figuratively, of course). Take a look over the list and match it up to your requirements.

Once you have the insurance all figured out, go ahead and get started with one of our Montana LLC registration programs. Whether you want to get your UTV or ATV, military surplus truck, supercar, or high-end RV registered, we’ve got you covered.