Do I Need Auto Insurance if I Don’t Have a Car?

non owner car insuranceMany people mistakenly believe that auto insurance policies can only be purchased by vehicle owners. However, an individual that borrows and drives someone else’s vehicle might incur financial losses if involved in an accident. Non-owner car insurance policies are available for people who drive regularly but who do not own a vehicle.

How Does Automobile Insurance Work?

First things first, it’s important to understand how basic auto insurance functions. The purpose of any automobile insurance policy is to transfer risk from the policy holder to the insurance company by protecting an owner or driver from financial loss due to their own negligence, or the negligent behavior of another driver. Automobile insurance policies are designed to provide compensation for a number of things.

If the driver of a vehicle is found to be at fault in an accident, the liability portion of the insurance policy compensates other drivers for any damages incurred. The comprehensive portion of a policy provides payment for repairs to the owner’s vehicle, regardless of who caused the accident or damage. Automobile insurance policies also pay for medical or property damages to any party as a result of an accident.

All policies have a pre-determined limit on coverage and will not pay any additional damages beyond the specified coverage amount outlined in the policy.

Who Needs Auto Insurance?

Almost every state requires owners of automobiles to purchase liability coverage. A person who does not own a vehicle and who does not operate a vehicle under any circumstances never engages in the type of behavior that leads to automobile accidents, so these individuals do not need to purchase automobile insurance at all.

However, a person who does not own a vehicle, but who is allowed to drive someone else’s vehicle on a regular basis does engage in road behavior that might lead to an automobile accident. Many insurance companies offer non-owner car insurance specifically tailored to those who regularly drive a borrowed vehicle.

Why Purchase A Non-Owner Auto Insurance Policy?

In most jurisdictions, the owner of an automobile is liable for any accidents caused by his or her vehicle, no matter who is behind the wheel. However, the vehicle’s owner also has the option to sue the driver responsible for the damages to recoup any uninsured losses.

In most cases, a non-owner driver who has the appropriate non-owners insurance coverage will be protected from having to pay damages out-of-pocket. Automotive insurance policies for non-owners are much cheaper than those issued to vehicle owners.

Most policies cost only a few hundred dollars a year, while the cost of an automobile accident can easily reach hundreds of thousands of dollars. Given the reasonable cost to purchase a non-owners insurance policy, it makes good financial sense for a regular driver to purchase a basic non-owner car insurance policy to protect themselves and the owner of the vehicle. A vehicle owner is also much more likely to lend their vehicle to a friend who has adequate insurance coverage.

What Do Non-Owner Policies Cover?

Non-owner insurance policies are basically liability policies that cover damage to other vehicles and drivers that occur in an accident caused by the insured driver. In some cases, medical costs incurred by the driver can also be covered for an additional amount. This is especially beneficial for a person who has no other health insurance. The vehicle itself is covered by the owner’s policy and is generally not covered by a non-owner insurance policy obtained another driver.

Having a non-owner policy in place is important because almost every state requires automobile insurance. Police officers will issue a ticket to a driver who cannot present proper insurance during a routine traffic stop. Even if the owner of the vehicle has failed to get insurance or has allowed a policy to lapse, a driver is protected against receiving an expensive ticket by having his or her own policy in place.

Non-owner auto insurance is especially beneficial for drivers who decide to rent a car. Without a previously existing insurance policy, a driver is forced to purchase insurance from the car rental company. Insurance obtained through the rental company can be significantly higher than a standard insurance policy.

Who Is Excluded From Obtaining Non-Owner Policies?

There are several limitations that apply to non-owner car insurance policies. Non-owners insurance cannot be purchased by a relative or member of the vehicle owner’s household. Members of the same family or household must be covered under the same policy as the vehicle owner and cannot obtain a separate non-owner policy. Non-owner policies are also not available to persons who drive a commercial vehicle or a vehicle owned in the name of a company or business.

Automobile accidents happen all too often and can lead to financial hardship if the proper insurance policies are not in place. Obtaining a non-owner car insurance policy is important protection for anyone who ever drives a friend’s automobile. If you are looking for an auto insurance company in MA, check out The Murphy Insurance Group, they can get you a great quote for your automobile.

(Photo: Pete)