Do You Need a Non-Owner Auto Insurance Policy?
Do you rent cars or use ride-sharing apps? Then you should invest in a non-owner auto insurance policy. Money Girl explains 6 common situations when you should have one to stay safe.
Laura Adams, MBA
About 10% of U.S. drivers regularly rent or borrow cars and don’t own one of their own. If that’s your situation, you may still need the protection of a non-owner auto insurance policy. It gives you liability coverage when you drive a car that you don’t own or you’re a passenger in a car owned by someone else.
Keep reading to learn common situations when having a non-owner auto policy makes sense and can keep you safe.
6 Situations When You Need a Non-Owner Auto Insurance Policy
- Renting a car.
- Borrowing a car.
- Using ride-sharing services.
- Using car-sharing services.
- Getting your driver’s license reinstated.
- Having a gap in insurance coverage.
Here’s the detail about these situations when you should consider having a non-owner auto insurance policy:
1. Renting a car.
When you rent a car, a non-owner auto insurance policy can protect you financially if you cause a crash. It typically costs less than purchasing coverage through the car rental company.
2. Borrowing a car.
If you often borrow a friend’s, neighbor’s, or relative’s car but aren’t named on the owner’s insurance policy, a non-owner policy makes sense for you, too. This is especially true if the owner of the car you borrow has a minimal amount of liability coverage.
Let’s say you cause a wreck while driving a borrowed car and are not named on the owner’s policy. You could be involved in a lawsuit and have to pay any amount not covered under the car owner’s policy.
However, a non-owner auto insurance policy does not cover damage you cause to a car you drive. It only covers damage to other cars, property, or injuries you cause to people who aren’t in a car you’re driving.
3. Using ride-sharing services.
In addition, you might want to look into a non-owner auto insurance policy if you often use services like Uber or Lyft. If you worry that a ride-hailing driver might not carry adequate coverage, it would protect you as a passenger.
4. Using car-sharing services.
Non-owner auto insurance also might be a wise investment if you don’t own a car but regularly drive cars from car-sharing services like car2go and Zipcar.
5. Getting your driver’s license reinstated.
Furthermore, you might need to buy a non-owner auto insurance policy if you don’t own a car but you’re trying to get your driver’s license reinstated. This might be the case after getting a conviction for drunk driving, reckless driving, or causing an accident as an uninsured driver. Non-owner SR-22 car insurance is required in some states, but not all of them.
6. Having a gap in insurance coverage.
Another situation when you might want to get a non-owner auto insurance policy is when you sell your car and don’t plan to buy a replacement vehicle. A non-owner policy would cover you as a driver during the period between cars.
Not having coverage, even for a short time, can raise the suspicion of a car insurance company and prompt it to charge higher rates once you get a new policy, because the insurer now views you as a riskier driver.
Tips for Shopping for a Non-Owner Auto Insurance Policy
One benefit of non-owner auto insurance is that it costs much less per year than traditional car insurance. The premium typically depends on two factors: your driving history and your credit-based insurance score (in states where it’s permitted).
You can get free quotes for a non-owner auto insurance policy at online sites such as Major Insurance, USAA, and Policy Genius. When shopping, remember that optional coverage, such as comprehensive and collision, isn’t available. However, some non-owner auto insurance policies do offer medical payments coverage (often called personal injury protection, or PIP) or uninsured/underinsured motorist coverage on top of the liability coverage.
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Wooden car model image courtesy of Shutterstock.
About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.