Don’t own a car but rent or borrow one frequently? Then it’s time to get familiar with the benefits of non-owner car insurance and how it can save money. Without it, you could unknowingly face the same financial risks as an uninsured driver.
It may not seem intuitive why a non-owner would need car insurance. But a non-owner policy is designed to provide liability coverage for damage you cause when driving a vehicle that you don’t own.
If you’re involved in an accident and found at fault, a non-owner policy would pay some damages. It would also shield you from lawsuits in the same way as traditional liability insurance.
What is non-owner car insurance?
Non-owner insurance typically covers bodily injury and property damage you might cause while driving a rental or a borrowed car. However, it does not cover damage you cause to the rented or borrowed car or your physical injuries.
In addition, some non-owner policies also include personal injury protection (PIP), which provides medical coverage for the injuries you suffer. They may also include uninsured/underinsured motorist protection for injuries caused by a driver who doesn’t have sufficient coverage.
What you won’t see in a non-owner policy are collision, comprehensive or towing coverage, which must be written on a specific vehicle.
Who needs non-owner car insurance?
The need for a non-owner auto policy varies widely. Here are some situations when you might need it:
- You live in a big, congested city and choose to rent or borrow cars rather than to own one. A liability policy that moves with you, rather than the car, can be more convenient and less expensive compared with day-rate coverage.
- You’re shopping for your next vehicle and want to maintain continuous insurance coverage, so you don’t get labeled a “high-risk” driver.
- You’re applying for a driver’s license in a state that requires proof of financial responsibility and you do not own a car.
- You use car-sharing services like Zipcar or Car2Go. In the event you cause a wreck, your non-owner policy would kick in if damages exceed a ride service’s liability insurance.
But if you own a vehicle, don’t have a valid driver’s license or routinely borrow a car from someone in your household (and are listed on their policy), you don’t need non-owner car insurance.
Eric Johnson, president of Eric Johnson Insurance Services in Gig Harbor, Wash., says a non-owner policy fits if you need coverage to begin the SR-22 reinstatement of your driver’s license. “If you get a DUI, you can do a non-owner policy as the cheapest way to facilitate the SR-22 issuance and keep your primary insurance,” he says.
How much does non-owner car insurance cost?
Non-owner car insurance typically costs much less than a standard policy on a car you own.
However, the rate varies depending on where you live and how often you plan to rent or borrow cars. The cost also depends on how much liability coverage you choose and your driving history, as high-risk drivers pay more.
But in many states, a non-owner policy may cost in the range of $200 to $300 per year. That’s much less than traditional car insurance, which is about $900 per year on average.
How can non-owner car insurance save you money?
Here are four ways that non-owner car insurance can save you money:
- If you frequently rent, a non-owner policy will cost less than rental car coverage.
- In most cases, non-owner policies don’t have a deductible. That means that in the event of an accident, you don’t have to pay anything before your insurance kicks in.
- If you’re between cars, maintaining coverage with non-owner car insurance will help you get the lowest rate for your next vehicle.
- If you cause an accident in a rental or borrowed car, having a non-owner policy would likely save more than it costs.