How to tell if you should buy your own car insurance.
In most states in the U.S., car owners are obligated to have at least some amount of car insurance. Unlike life insurance, which is a good idea but optional, car insurance is mandated for most drivers.
But even in states that don’t specifically require car insurance, drivers are still financially responsible for any damage or injuries they cause with their vehicle, so car insurance is still a sound investment. Generally, if you have a car and you drive it, you need car insurance (how much coverage you need depends on your specifics).
But that general rule doesn’t apply to every single driver out there. What about drivers who own a car but never, ever drive it? Or drivers who don’t own a car but frequently drive rentals, use car-share apps, or borrow from friends? If the general rules don’t apply to your situation and you’re wondering if you still need car insurance, here are some quick answers.
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If you’re a licensed driver but you don’t own a car of your own, you probably don’t need car insurance. Keeping your license valid and up to date is a good idea even if you don’t own a car, because it means you can borrow or rent one occasionally.
But no, unless you’re borrowing or renting cars frequently, you don’t need to buy your own car insurance. Broadly speaking, car insurance follows the car, not the driver. That means that if you borrow a car from a friend and cause an accident, it will still be covered by their insurance even if they weren’t driving the car at the time.
However if you live in a household with another driver who has a car their insurance may require you to be listed on the insurance policy as a named driver. If you borrow a car from someone in your household and cause an accident, insurance may not cover it if you weren’t already listed on their policy, and you may also face legal repercussions for driving without insurance.
As we mentioned above, if you have a license but don’t own a car, and borrow one only occasionally, you probably don’t need car insurance. And you don’t need car insurance to rent a car. Rental car companies do offer insurance for purchase, but it can be pricey, and car-sharing companies may only give you the bare minimum of coverage for your state.
But if you frequently rent or borrow cars, or often use a car-sharing service like Zipcar or Car2Go, you may want to consider whether it’s worth having a form of limited car insurance called non-owner car insurance.
Non-owner car insurance can help fill in some of the potential holes in whatever insurance already covers the vehicle. Non-owner insurance includes liability coverage and you may be able to add personal injury protection and uninsured/underinsured motorist coverage to your non-owner policy, depending on the provider. But non-owner car insurance doesn’t include comprehensive and collision insurance.
Non-owner insurance policies cost less than a standard auto policy but not every provider offers them. Still, non-owner car insurance can be a good option if you’re worried about getting into an accident in a rental car and being on the hook for any costs that aren’t covered by the rental company’s limited insurance.
What about people who own cars they never drive? Well, if you have a car but plan to keep in your garage or leave it in storage long term, you may not technically need insurance, but maintaining coverage is still a good idea.
Even if you let your insurance lapse because you’re not driving a car, having any lapse in coverage can raise red flags for providers in the future and lead to higher premiums down the line. And just because your car isn’t being driven doesn’t mean it can’t get damaged — it’s still vulnerable to damage from perils like fire, flood, weather, falling objects, theft and vandalism.
If that’s your situation, you may want to explore a type of coverage called car-storage insurance. Also referred to as comp-only or seasonal vehicle insurance, this type of coverage strips down your policy to comprehensive insurance only, which will protect your vehicle from damage it can sustain while it’s not being driven.
A car-storage policy will also have significantly lower monthly premiums than a standard auto policy while still maintaining your coverage, so you don’t have any lapses on your record. Just remember that you need standard auto insurance if you’re going to drive it again — driving a car that only has comprehensive coverage could lead to high costs and big trouble for you if you get into an accident.
What about licensed drivers who don’t currently own a vehicle but are about to purchase one? If you already have a car and a policy, you don’t have to worry about this: it’s easy to add a new vehicle to an existing policy, and most providers give you a certain amount of built-in coverage for a new car to give you time to officially add it. But if you don’t have a car already, you’ll want to put some thought into lining up the timing.
Car insurance doesn’t take long to buy, and it can usually go into effect the same day you purchase it, but you might want to shop around and compare quotes once you know what car you’re buying but before you drive it off the lot. Once you have information about your new vehicle, you can purchase your new policy and choose for it to go into effect the same day you get your new car.
Colin Lalley is the Associate Director of SEO Content at Policygenius in New York City. His writing on insurance and personal finance has appeared on Betterment, Inc, Credit Sesame, and the Council for Disability Awareness.
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