Is Purchasing Non-Owner Car Insurance a Good Idea?

non-owner car insurance coverage

When most people think about auto insurance, they automatically think about purchasing it for the car they own. And if they don’t own a car yet, or plan to sell their only vehicle, they no longer consider coverage a necessity.

The truth is, there is coverage for everyone — even for someone who doesn’t own a car. It’s called non-owner car insurance and, while it may seem like an unnecessary expense, there are some reasons that a non-car owner could benefit from this type of coverage.

What is Non-Owner Car Insurance?

A non-owner car insurance policy is liability insurance available to individuals who would like coverage, but don’t own a vehicle.

Liability insurance provides an individual with evidence of financial responsibility. Additionally, it protects policyholders in the event they are involved in an accident, and are at fault of causing damage to property or injuring others.

According to the National Highway Traffic Safety Administration (NHTSA), an estimated 2.24 million people were injured in motor vehicle traffic crashes. With the high likelihood of getting into an accident, it’s important for everyone behind the wheel to carry coverage.

For those who do not own a vehicle, acquiring non-owner car insurance is a reasonable solution. It is also beneficial for those who are deemed high-risk drivers and need to satisfy conditions such as filing an SR-22 to reinstate a driver’s license.

What Does Non-Owner Liability Protection Cover?

Similar to a standard liability protection policy, a non-owners car insurance policy covers bodily injury liability and property damage liability. In addition, a policyholder may have access to medical payment coverage, uninsured motorist bodily injury coverage and underinsured motorist bodily injury coverage.

Because the insurance is not associated with an actual vehicle, however, you won’t receive collision insurance, comprehensive coverage, rental reimbursement or towing and labor coverage. If the vehicle you’re driving doesn’t already have these supplemental coverages, you may have to pay out of pocket for the associated costs.

The Benefits of Acquiring Non-Owner Car Insurance Coverage

For a person who does not own a vehicle, but may frequently need to drive other vehicles to get around, there are some definite benefits to non-owner car insurance coverage. Here are just a few:

1. Almost Every State Requires Liability Protection

One important reason to consider non-owner car insurance coverage is that almost every state requires some form of liability protection. In fact, New Hampshire is the only state that does not require motorists to carry an auto insurance policy to prove financial responsibility. Of course, an even greater benefit of coverage is that, required or not, you are guaranteed to not owe 100 percent of the out-of-pocket costs if you are at-fault in an accident that results in damages or injuries.

2. The Other Driver May Not Have Liability Coverage

Uninsured drivers are sometimes covered by the insurance policies of drivers with whom they have an accident (and in which they are at fault) under the uninsured motorist clause. But if you are at-fault in an accident with a person who does not have liability insurance, you will have to pay out-of-pocket costs that could reach into the hundreds of thousands. Carrying your own liability protection resolves this issue.

3. Rental Cars Come Much Cheaper

Most rental companies will not issue vehicles without at least liability insurance if it is required in their state. Some won’t let their vehicles leave their lots without some type of additional comprehensive or collision insurance (usually loss damage), if your credit card doesn’t cover it.

If you are required to purchase the rental company’s protection for its own vehicle, you can save in the ballpark of $10 per day by presenting your own liability protection.

4. Car Insurers Penalize Lapses in Coverage

Though it’s not often discussed, insurance companies sometimes penalize individuals who have allowed their car insurance to lapse, which is why one of the first questions asked when applying for new coverage is “Are you currently insured?” followed by something that asks about the last time you were covered. While the penalty for allowing coverage to lapse can vary from company to company, it definitely pays to hold on to coverage whenever possible.

5. Non-Owner Coverage Is Affordable

The cost of a non-owner car insurance policy is generally just as affordable, if not more so, than a standard liability policy. Depending on the company you work with, coverage could range from $200 to $300 annually. The reason it is usually more affordable is due to the risk of an accident decreasing, with the reduced likelihood that the policyholder is actually driving a car.

Non-Owner Car Insurance is Beneficial, But is it Necessary?

So should a person without a vehicle automatically purchase non-owner car insurance coverage? Not necessarily. Here are a few scenarios in which non-owner car insurance is not necessary:

  • There is a vehicle in your household: Instead of purchasing non-owner coverage, you could just be added on the car owner’s policy as an additional driver.
  • You drive someone else’s car regularly: Again, if you are the regular driver of another vehicle, it’s better to simply get added to that person’s policy.
  • You drive for business use: If you are driving a company car, it may be better to purchase a commercial non-owners policy, particularly if the company car is being used for making deliveries or transporting individuals.
  • No driver’s license: If you don’t have a driver’s license and don’t plan to acquire one in the near future, it’s probably not necessary to pursue non-owner car insurance.

If you have determined, however, that coverage is necessary, acquiring your own policy is a matter of simply calling insurance companies and requesting quotes.

As with any other insurance policy, it’s not advised that you accept the first policy offered. Shop around for auto insurance to ensure you secure coverage with a company you feel will offer the most affordable and highest quality protection.