If you don't drive a car regularly but want protection when you do or to keep continuous coverage in place, a non-owners car insurance policy might be a good option.
Many auto insurance companies offer this type of coverage, although it's not widely promoted. A policy typically costs about half of that of what a full operators car insurance policy would cost.
"If you don't own a vehicle, it's recommended you carry some type of non-owners coverage that provides liability [insurance]," says Angela Preciado, auto product management director at USAA Insurance.
The monthly cost of non-owners auto insurance varies. Factors that influence pricing include:
Looking for cheap car insurance? Compare car insurance quotes for a non-owners 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.
Non-owners auto insurance generally covers liability only, which protects you if you are at fault for any injuries or property damage suffered by another driver.
Non-owners bodily injury liability coverage will cover injuries suffered by another driver or passengers of another vehicle due to an auto accident that you have been deemed to be at-fault for. Property damage liability covers damage you cause to another vehicle or property, such as a fence or guardrail.
Non-owners insurance typically does not include the following coverages:
“The intent of the non-owners is to provide liability protection, not physical damage coverage for the vehicle," Preciado says. So, if you borrow your friend’s car and crash it, he or she would need collision to cover the damage to the car because your non-owners policy would not.
If you regularly rent cars, look for an auto insurance provider that offers a non-owner policy that extends to rental vehicles. Many car insurance companies will not provide a non-owners policy to an individual who intends to rent vehicle. Also, if you plan on renting or borrowing a car to use in business, you won’t be eligible for a non-owners policy with most car auto insurance providers.
According to the Insurance Information Institute (III), rental car companies usually must, by law, provide the state minimum liability insurance. Thus, if you want a non-owner policy just to rent a car, there likely is no need for it.
Rental car agencies do offer excess liability coverage at the counter -- which the III notes is typically $7 to $14 a day -- if you would like higher liability than the state’s minimum limits carried on your rental car.
If you occasionally borrow the car of a friend or family member, the owner's car insurance policy will cover any accidents. However, a non-owners policy can still pay off in such circumstances as secondary coverage.
If the owner's liability limits are low, your non-owners policy may offer additional protection if the owner’s policy is exceeded. For example, if you crash your friend’s car and he only has a $5,000 property damage liability limit and your non-owners limits is $25,000, your policy could be looked to after his is exhausted. Without the non-owners policy there to help pay for damages, you could instead be looking at being sued by the damaged party.
If you opt for a non-owners 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 CDW or 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 a rental car is being repaired. A waiver typically costs between $9 and $19 per day, according to III.
A borrowed car from a friend also would have no coverage for damage or theft under a non-owners policy, so make certain the owner has collision and comprehensive on the vehicle. If not, then be forewarned that if you damage the vehicle, it will be you personally that will be responsible to the owner for paying for damages.
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