Non-owners insurance: Coverage for drivers who don't own vehicles

If you don't own a car but drive often or just want to maintain continuous car insurance coverage, it may be a good idea to consider buying a non-owners car insurance policy.

There are other situations in which buying a non-owners insurance policy is also wise -- like if you often borrow a car from friends or relatives.

Non-owners car insuranceWhile a standard personal auto insurance policy normally covers the car owner and anyone else using the insured car with the owner’s permission, his or her liability coverage could be low. If you got into an accident and the damage you caused exceeds your friend's insurance liability limits, the injured party can come after your personal assets, such as your home, to recover the rest. The same situation could apply if you often use a company car for personal use. A non-owners policy can help in such situations.

The purpose of non-owners car insurance

A non-owners policy focuses mainly on providing you with protection for both bodily injury and property damage liability coverage. Some car insurance companies also offer medical payments and uninsured/underinsured motorist bodily injury coverage as part of a non-owners policy.

Optional coverages, such as comprehensive, collision, towing reimbursement, and rental reimbursement, are not available for non-owners policies since there is no vehicle attached to the policy. There are typically no deductibles associated with non-owners car insurance. (For an explanation of all these terms, see car insurance basics.)

To obtain a non-owners policy, you must have a valid driver’s license and not own a car.  Most insurers also mandate that you don’t have regular access to a car, such as one owned by another member of your household. If someone in your home has a vehicle, get listed on that auto insurance policy if possible. Here’s more about determining which drivers must be listed on an auto insurance policy.

Though details vary by state, car insurance quotes for a non-owners policy will generally run you about half the cost of a standard insurance policy for people who own cars. 

When non-owners auto insurance kicks in

Your non-owners auto insurance may cover you when you rent a vehicle and are involved in an accident.  However, not all non-owner policies extend coverage to rental vehicles, so check with the car insurance company before purchasing such a policy if you intend to rent cars.

If you borrow someone's car and crash it, the vehicle owner's car insurance pays out first, and if it's not enough to cover damages, your non-owners policy would then pay out as secondary coverage. For instance, if the car owner's liability limit is $10,000 for property damage, and you cause $17,000 worth of property damage, your insurance would cover the last $7,000.  Remember this pays for the car that you hit, not your friend’s car or rental vehicle.  A non-owner policy doesn’t include collision coverage; thus, it doesn’t cover the vehicle you were driving.

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