Even if you don't have your own wheels, it might be a good idea to have your own auto insurance.
Non-owner car insurance protects you in case you cause an accident in a car you borrow or rent (if your particular policy covers rentals, not all do) and end up on the financial hook for the damage and injuries other people suffer.
Although not heavily advertised, non-owner policies are available from a variety of insurers and provide important protection as well as proof of financial responsibility. Just as with standard insurance, you should compare car insurance quotes to be sure you get the best car insurance rates.
As the name implies, a non-owner policy is not for you if you own a car, and generally you're excluded from purchasing one if you have regular access to a vehicle. If someone regularly furnishes a vehicle for you, you should be a listed driver on that car owner's policy. In addition, the vehicles you rent or borrow should be for personal use only.
Here are five must-know facts before you buy:
A non-owner policy provides liability insurance, although some insurance companies may also offer personal injury protection, medical payments and/or uninsured/underinsured motorist bodily injury coverage.
Liability insurance pays for the damage and injuries you cause others. Without liability insurance, you could be left without the financial means to pay if you’re found at fault for an auto accident.
Some insurers offer non-owner policies that extend coverage to rental cars. If your intention is to buy a non-owner insurance to cover you when you rent vehicles, you need to check with the insurance company you’re purchasing from to make certain its policy will.
Keep in mind that rental car companies usually are required, by law, to provide the state minimum liability coverage for its cars. Excess liability insurance that allows you to raise your liability limits is available through rental car companies and runs about $7 to $14 a day.
If you borrow a friend's car, your friend's liability insurance typically will pay out first if you caused an accident. Your non-owner policy would kick in as secondary coverage if the damages exceeded the friend's liability limits.
Without a non-owner policy, the injured people could come after you to pay their medical bills and car repairs if your friend didn't have enough coverage.
How much protection should you buy?
"This will vary on the customer's assets," says Jarrett Dunbar, a Nationwide Insurance spokesperson. "Non-owner policies are a very unique insurance situation."
As such, Nationwide agents offer personalized reviews to help customers select the right amount of coverage they can afford, Dunbar says.
"This involves understanding how often our customer will have use of other vehicles and how those vehicles will be used," he says. "It's also important to understand who is responsible for damage to the vehicle if an accident were to occur and how your coverage interacts with other insurance policies that may be in play."
People who need to provide proof of financial responsibility to keep or reinstate a driver's license are the primary buyers of non-owner policies, says Sandra Spann, a spokesperson for American Family Insurance. After serious violations, some states require you to file an SR-22 or FR-44 form, which certifies you have the type and amount of insurance mandated by the state. To get the document filed, you have to buy coverage from an insurer that provides the filing. (See "SR-22 solution: Non-owners car insurance.")
"People who do not own a vehicle, but still need to show this proof, would purchase a non-owners policy," Spann says.
Non-owner car insurance does not include these optional forms of car insurance:
That means the policy does not cover the vehicle you borrow or rent if you wreck it or if it gets damaged or stolen while you're using it.
To have protection for a rental car, you can purchase a loss damage waiver or a collision damage waiver through the rental company. The waiver isn't insurance, but rather an agreement by the rental company to waive your financial responsibility if the rental car is damaged or stolen. Without the waiver, you could face a hefty bill for repairs and loss of use if you crash the car.
Costs vary anywhere from 10 percent to 80 percent of the price you'd pay for a standard auto policy, Dunbar says.
"Much depends on how often the customer has access to a car, how that car will be used, and what age the operator is," he says.
Your driving history and insurance risk score based on credit information may also be considered, Spann says
Going without any car insurance, even if you don't own a car, can lead to higher car insurance rates when you do buy or lease a car and need a standard policy. Insurers consider a gap in your car insurance history a red flag signaling high risk.
Maintaining a non-owners policy lets you keep a continuous history of insurance coverage so you can qualify for better rates later as a car owner.
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