We get a lot of Montana LLC car insurance inquiries. Tons of people want to know all about they can save thousands of dollars in taxes by buying high-value cars and RVs in and registering them under an LLC in Montana.
See here for an overview of the topic, and how to make it work.
One question we get is “do I need to have my insurance in Montana if I register my LLC in another state?”
The basic rule is this: The insurance is on the car, not on the LLC. So you should ensure it wherever you garage the car.
If you live in New York but primarily keep the car in a garage in New Jersey, you should insure the car in New Jersey.
Don’t try to insure the car in a state where it’s not primarily garaged just to save a few dollars. If that happens, you put the entire value of the car at risk. Here’s why:
Suppose you have your high-dollar car registered in Montana, and it has Montana tags. But you keep it in Florida. And bang… the car is destroyed by a storm surge during a hurricane.
If you get in a wreck, and your insurance company finds out that your car is used year-round in your state of residence…. that’s nowhere near Montana (In Florida, they can tell by your tolls), they may deny the claim outright.
You didn’t tell the insurance company the car was primarily being stored in Florida. So you didn’t pay to insure the car against Florida hazards. You essentially attempted to defraud the insurance carrier in order to save a few dollars per month in premiums.
So you save a few grand in sales tax on your beautiful McLaren Artura. But you put hundreds of thousands of dollars at risk!
This is going to be true with a claim on any high-value car. Insurance claims on a supercar aren’t handled the same way they handle a claim on your brother-in-law’s Kia Rio. At the six-figure level, your claim will probably go to a special underwriting desk of wizened professionals and get visibility from top executives and fraud experts before they cut the check.
But if it gets damaged or destroyed in a wreck, or in a hailstorm or floods well out of state, your insurance carrier will do some digging to find the evidence you falsified where you were storing and using the vehicle.
They’ll have a meeting about you. And they’ll have their friends pull toll records on your plate. If you’ve got your car registered in Montana but the toll records show you’ve been driving your car up and down the Florida Turnpike all year round, they’re probably going to spike the claim.
So you may save thousands in the short term. but you put hundreds of thousands at risk!
Montana LLC Car Insurance Verification System
Here’s another thing about Montana to keep in mind:
Montana has a commuter system in place called the Montana Insurance Verification System. With this system, any law enforcement officer can run your tags, and instantly find out if you have insurance in force.
But they can only see individual insurance policies. Not commercial policies. And they can only see Montana insurance policies. They can’t tell if you have an insurance policy from out of state.
That means that if you register your car in Montana, but garage it and insure it out of state, Montana might send you a bunch of nastygrams in the mail telling you you have to insure your vehicle.
You can ignore these.
You’re not breaking any law in Montana.
The state where you have your car garaged may have some laws about registering your car there within a certain number of days. But they may only have limited application if you’re not driving the car!
Furthermore, just because the car is titled to an LLC and an LLC paid the registration fees in Montana doesn’t mean you have to take out a commercial insurance policy.
Of course, if you’re actually using the car for commercial purposes, you should get a commercial policy. It will provide you with much better protection. But otherwise, you can take out a personal policy on the car, if you prefer. You won’t be violating any law in Montana.
Lots of people we talk to are ‘full-time RVers.”
If you actually reside in your RV (on wheels!) most of the time, rather than in a fixed house, that’s you.
The Montana registration tax shelter can work very well for you because, unlike other people who have fixed residences outside Montana, you don’t have to worry about what Georgia, California, or any other state thinks about how you or Montana do business.
Because your RV is your primary residence, you can set yourself up as a bona fide resident of Montana. And so your tax liability will be to Montana and not to any other state!
That’s why if you drive around the country, and you see high-value RVs on the road, lots of them have Montana plates.
Tip: When you set up your LLC, make sure there’s a physical Montana address on your LLC paperwork with the Montana Department of State.
And, of course, insure the vehicle where you have it primarily garaged.
More on full-time RV insurance considerations in a future article.
Use an insurance carrier that “gets it.”
Most generalist insurance carriers and their agents don’t know much about using a Montana LLC car insurance and buying and registering a high-value car, truck, or RV as a legal tax shelter. Most of the “household names” that advertise on prime time television don’t invest much in these niches. But these are very specialized markets. You really need an agent that knows how to write a policy in each of these specialized markets. And those agents need a supportive insurance company that understands these markets and wants this business.
Usually, these aren’t the “big names.” They’re generalists. That’s how they got big!
At Select, we’re independent car insurance brokers who can match your vehicle and situation with a car insurance company that has programs to match you.
For example, when you’re dealing with the collector or exotic cars, or any car you expect may actually grow in value over time, rather than depreciate like normal cars, should consider an “agreed value” insurance policy rather than a normal off-the-shelf insurance policy. Otherwise, as your car grows in value, you could find yourself woefully underinsured if you ever have a claim.
Not every carrier will work with you on this. Again, this is a specialized market and needs some specialized underwriting from a carrier that’s well versed in insuring high-end and collector cars.
For high-value, collector, exotic, and specialty cars, these carriers include Hagarty, American Collector, American Modern, and Pure Insurance.
All these insurance companies know the game, They deal with Montana registration from out-of-state owners all the time.
On the RV side, great carriers, depending on your overall situation, include National General, Bristol West, Foremost, and American Interstate.
At Select Insurance Group, we’re appointed with all of them. And our agents know the deal.
Use an insurance agent that’s licensed in multiple states
You should also use an agent that understands the Montana LLC car insurance technique, the high-value car market, and the RV market, and that’s licensed in multiple states.
Why is this critical? Let’s say you just bought a Porsche 918 Spyder in Montana, but you plan to garage the car in Missouri, where you live. You call a low-priced car insurance company in Montana to arrange insurance on your new sports car.
Now, you and I both know that you should insure the car where you have it garaged.
But suppose your rando noob agent in the call center isn’t licensed in Missouri, and neither is the broker or carrier. If any of these entities isn’t licensed in Missouri, do you think they’re going to tell you that?
No. They’ll write up the policy in Montana. And take the commission.
They’ll probably do some high-fiving around the office because a comprehensive collision policy on a million-dollar Porsche generates a nice commission for the agent and broker.
But they aren’t doing you a service.
Because if God forbid you ever have a claim, the carrier has a ready-made escape hatch. And you could be left high and dry, out the value of a million-dollar car.
If you call Select, all my agents can write the policy anywhere it makes the most sense for you. We’re licensed in all 50 states except for Hawaii and Alaska.
So if you want to take advantage of the tax benefits of Montana LLC car insurance, we can help you – almost no matter where you plan to garage the car. Contact us today, and get quotes from all the top carriers in your niche, in the state where you’re going to garage the vehicle.
We’re able to solve the problem. And get you protected.
See you on the road!
Steve “Mr. Insurance” Ludwig
CEO, Select Insurance Group
For Further Reading
Montana LLCs and Car Registration – Everything You Need to Know
High Net Worth Car Insurance – What Wealthy and Soon-T0-Be-Wealthy Drivers Need to Know
Car Insurance for Custom Cars, Modified Cars, and Hot Rods
Closed-End vs. Open-End Leases and Exotic Cars
Lower Your Payments – How to Finance a High-End Car