If you don't drive a car regularly but want protection when you do, nonowners car insurance might be a good option.
Many auto insurance companies offer this type of coverage, although it's not widely promoted. A policy typically costs a few hundred dollars a year and can make sense for people who frequently rent a car.
"If you don't own a vehicle, it's recommended you carry some type of nonowners coverage that provides liability [insurance]," says Angela Preciado, auto product management director at USAA Insurance.
The monthly cost of nonowners auto insurance varies. Factors that influence pricing include:
Looking for cheap car insurance? Compare car insurance quotes for a nonowners policy to ensure you get the most bang for your buck, says Mark Smigelski, a personal insurance product specialist at State Auto Insurance Companies.
"It's very competitively priced," he says.
Nonowners auto insurance generally covers liability only, which protects you if you are at fault for any injuries or property damage suffered by another driver.
Nonowners insurance typically does not include the following coverages:
“The intent of the nonowners is to provide liability protection, not physical damage coverage for the vehicle," Preciado says.
Nonowners auto insurance may make sense if you regularly rent cars. Insurance sold by a rental agency is often expensive – liability insurance purchased via a rental car company costs between $7 and $14 a day, according to the Insurance Information Institute (III).
Nonowners insurance is "most likely cheaper" than rental agency insurance, particularly if you rent a car often, Smigelski says.
If you occasionally borrow the car of a friend or family member, the owner's insurance policy will cover any accidents. However, a nonowners policy can still pay off in such circumstances.
For example, if the owner's liability limits are low, your nonowners policy may offer additional protection if you are sued.
In most cases, you will not have to pay a deductible if you file a claim under a nonowners insurance policy.
If you opt for a nonowners car insurance policy, it's important to remember that the policy will not cover any damages that occur to a car you rent. For this reason, it often makes sense to purchase a collision damage waiver – commonly known as a "loss damage waiver" – from the car rental agency.
Technically, a loss-damage waiver is not insurance. But, it will protect you from being responsible for damage to or the theft of your rental. Waivers also may offer protection from "loss of use" fees charged to renters while the car is being repaired.
A waiver typically costs between $9 and $19 per day, according to III.
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