Updated October 29, 2019|5 min read
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Non-owner car insurance could be a good choice for drivers who don’t own a car but drive regularly
If you frequently borrow or rent cars, or use a car-sharing service like Zipcar or Car2Go, non-owner insurance could be a good idea
It usually just includes liability coverage, giving you extra protection in case you cause an accident
As confusing as it may seem, you might actually need car insurance, even if you don’t own a car. If you’re a driver who frequently borrows cars you don’t own, rents them through rental companies or uses a car-sharing service like Zipcar or Car2Go, non-owner car insurance can make sure you’re adequately protected from the financial liability if you cause an accident while driving.
Non-owner car insurance is a type of stripped-down car insurance policy. It often just includes liability coverage, which covers the costs if you damage someone else’s car or property, or injure someone in a car accident. But non-owner car insurance can be hard to purchase — here’s how to understand non-owner policies, how to determine if one would be right for you and how to find and buy non-owner insurance.
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Non-owner car insurance, sometimes called non-owned vehicle insurance , provides limited insurance in instances where you drive a personal vehicle that you don't own. It may be a rental car or a friend’s car that you borrow infrequently. Essentially if you’re going to be driving a car sometimes but not daily (or not even weekly or monthly) but you still want to be protected, you should look into non-owner vehicle policies.
Non-owner car insurance works basically the same way as standard auto insurance — you purchase a certain amount of protection from a car insurance company, and pay a regular premium to keep your policy in-force, or active. Then, if you cause damage while driving your rental car or borrowed car, your car insurance provider will cover the costs.
Unlike a standard car insurance policy, which usually includes coverage meant to protect the policyholder’s vehicle, non-owner car insurance is often limited to liability coverage, meaning it covers bodily injury (BI) or property damage (PD) that other people incur from an accident you caused.
Sometimes, you can add these coverages to a non-owner car insurance policy:
Personal Injury Protection (PIP): Covers medical and rehabilitation expenses if you or your passengers are injured in a car accident. Also covers other related expenses, like lost wages.
Uninsured/underinsured motorist coverage: Covers the costs if you’re in an accident caused by a driver who either doesn’t have insurance or whose insurance can’t pay for the full extent of the damage.
Because there’s no vehicle insured under a non-owner policy, it doesn’t include the other coverages that are usually part of a full-coverage policy, including:
Collision coverage: Covers damage to your own vehicle after an accident, regardless of who was at fault.
Comprehensive: Covers any damage to your car that can happen when it isn’t being driven, including damage from extreme weather, falling objects, flood, fire, vandalism and theft.
Roadside assistance: Covers the types of emergencies that leave you stranded, like flat-tire changes, jump-starts, and towing.
Basically, non-owner insurance is liability only. If you’re in a car accident, your non-owner insurance policy will cover damages to the other party’s car, not the car you’re driving.
There are other limits to non-owner car insurance. For instance, it only covers you; you can’t put an additional driver on your policy.
The cost of car insurance varies widely and is based on individual factors like your age, ZIP code, driving history and credit score. But because non-owner insurance is such a limited form of insurance, it will cost much less than a standard car insurance policy.
Think about it this way: a 2017 report from the National Association of Insurance Commissioners put the average cost of car insurance in the U.S. at $1,099 per year. According to that same report, the average cost of liability coverage was $538.73 a year. And a non-owner policy is essentially just liability insurance, for a driver who doesn’t own a car at all. You may pay less than $500 annually for non-owner car insurance.
If you own a car, seek a regular auto insurance policy. (And if you drive for Uber or Lyft, add rideshare insurance.) But if don't own a car, you may want to consider non-owner insurance if these situations apply:
You drive someone else’s car frequently. Generally speaking, when you drive another person’s car, their auto insurance policy covers you. Non-owner insurance is an extension of their policy’s liability coverage: If you get into an accident while driving their car and the damages exceed what their policy will pay, your non-owner policy will cover the rest. A friend or relative’s auto insurance coverage may vary from the bare minimum to the absolute maximum. Your non-owner car insurance will make sure you have enough coverage so you don’t pay out of pocket in the event of an accident.
You rent cars frequently. Many states require you to carry liability insurance when renting a car. Most drivers buy this from the rental car company, but the rental car coverage you get at their desk is often more expensive and offers less protection than a non-owner insurance policy. Buying a non-owner policy and declining liability coverage when you rent a car may be a more cost-effective way to protect yourself if you rent more than a week or so per year. The same goes for car-sharing services like Zipcar or Car2Go; you’ll get some coverage with your subscription, but a non-owner policy will add supplementary liability protection in case damages exceed what a Zipcar policy will pay.
You’re required to have insurance after a DUI. Accident or not, a DUI or similar substance abuse conviction can pose serious consequences. It’ll land on your criminal record, and depending on the severity of the incident, can see you getting your license revoked for an extended period of time. When this happens, you’ll garner SR-22 status, named for the form you need to fill out that requires you to have auto insurance, even if you have no license and aren’t allowed to drive. Thankfully, the law will accept you having even the most minimal non-owner car insurance policy just to prove you have some sort of coverage until your license is reinstated.
You’re in between cars. If you find yourself car-less while saving up or shopping for a new car after yours has died or been totaled, you may want to maintain insurance coverage if you don’t want your premiums to rise once you decide on a new set of wheels. Let your auto insurance coverage lapse for even a short period of time, and you could be considered "high risk" and charged higher rates by carriers once you sign up for a new policy with a new car on the plan. A non-owner policy fills that gap and tells insurers that you’ve gone through the trouble of staying covered continuously.
There are times when non-owner car insurance doesn’t make sense:
You borrow cars very infrequently. Taking out an entire policy and paying regular premiums -- no matter how affordable -- is a waste of money if you find yourself borrowing someone’s car only once a year. Your best bet to stay covered is to avoid a non-owner policy and see if you can be added as a driver on the vehicle owner’s policy. It could mean borrowing a parent’s car or sharing a car with a spouse where they’re the primary policyholder, and their insurance provides better coverage.
You’re borrowing a car for a long period of time. If your roommate is taking a summer-long trip across Europe and leaving their car with you for several months, you start to veer into insurance needs that a non-owner policy can’t meet. In this case, while you’re not the vehicle owner you’re the primary driver, and a regular insurance policy, even for one season, would provide the necessary comprehensive, collision and liability coverage missing from a non-owner policy.
You borrow a car from someone in your household. If you live with the person whose car you’re borrowing frequently, you should be listed on their policy as a covered driver rather than take out a separate non-owner policy. Their insurance company may even require everyone in the household to be listed on their policy.
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Some of the most popular car insurance companies that offer non-owner insurance are GEICO, State Farm, Nationwide, The General, and USAA. However, it can be difficult to tell online whether or not a carrier offers non-owner car insurance.
That’s why we recommend working with an independent insurance broker who can help you determine whether a non-owner policy is right for you, help find you carriers that offer coverage and help you shop around to get the best rates.
Before you buy, check with a prospective insurer about what they consider a "non-owned vehicle" and what constitutes "regular use." Some insurers, for instance, won’t extend a non-owner car insurance policy to someone who lives with an actual car owner.
While there are instances when you can get car insurance without a driver’s license, this isn't one of them, because you're ostensibly planning on driving the car, and driving without a license is illegal.
But what if you don’t have your driver’s license? Finding auto insurance when you’ve got a learner’s permit is a double-edged sword: It can be difficult to get insured until you’ve earned your driver’s license, but you need insurance before you can drive.
If you’re a teen with a driving permit, your parents’ car insurance provider may cover you until you obtain your license and can get your own insurance or be officially added to their policy. Once that time comes, decide you’ll need to decide the type of insurance you need.
If you’re an adult learning to drive for the first time, you may be able to be added to the policy of a spouse, significant other or a friend if you’re a learner’s permit holder. If you’re an adult permit holder, getting insured might prove more difficult, but not impossible.
Check around with carriers who specialize in high-risk policies, or who’ll allow you to get added to the policy of the primary vehicle driver -- usually the person who holds the main car insurance policy. The right insurance company will be willing to cooperate and add an unlicensed driver onto an existing policy without raising your premiums too much.
Not owning a car or having no driver’s license shouldn’t deter you from finding auto insurance or make you give up on driving a car altogether. A non-owner insurance policy may be the temporary measure you need to confidently hit the road.
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