When I moved to New York to work with PolicyGenius, I knew it would be a big change from North Carolina.
One of the biggest changes? Relying on public transportation to get me pretty much everywhere.
But I’d had my car for a while, and I wasn’t ready to give it up quite yet! What if I decided that life in the Big Apple wasn’t for me? Or what if I decided to one day brave the congested, pedestrian-filled, opposite-day-parking madness that is owning a car in New York City? Or what if I just couldn’t get over the nostalgia of the first car I bought?
I ended up leaving my car with my parents in North Carolina, but that brought up the next question: what does all of this mean for my insurance? I’ve had auto insurance since I was a teenager, but could I get car insurance if I didn’t actually have a car – and why would I want (or need) to?
It turns out you can, and it could be worth it.
Non-owner car insurance policies
The most common way to get car insurance when you don’t own a car is with what’s called a non-owner car insurance policy.
Non-owner car insurance, sometimes called non-owned vehicle insurance, provides limited insurance in instances where you have a "private passenger auto, pickup, van, miscellaneous vehicle, or trailer not owned by, or furnished or available for regular use." That’s USAA’s definition of a non-owned vehicle; it’s pretty standard, but your insurer might have their own definition of what they consider a non-owned vehicle.
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 can look into non-owner vehicle policies.
To know whether or not non-owner car insurance is worth it, it’s important to know the different types of protection you can get with your auto insurance.
Non-owner car insurance usually only covers the policyholder – you can’t add additional drivers like you can with other policies – and offer standard liability coverage, and some policies will let you add medical and underinsured and uninsured motorist protection. What they usually won’t offer is collision or comprehensive coverage.
On the other hand, because it doesn’t offer as much coverage and you won’t be driving a vehicle very often (and therefore are less likely to get into an accident) non-owner vehicle policies can often be a bit cheaper than standard auto insurance policies. You’ll still be subject to factors that set your car insurance rates like your age, gender, driving record, and more, but on average you’ll save a little money compared to full car insurance coverage.
Why would you need it?
The obvious question in all of this is if you don’t own a car, do you really need car insurance? Seems silly, right?
But there are a few scenarios where it might pay for the coverage.
First, you might borrow other people’s car a lot. Maybe you don’t have your own but you still live in a place where public transportation isn’t widely available or convenient but you have really generous friends who are willing to let you take their car for a joyride (or to buy groceries or whatever). If you’re using someone else’s car their insurance should cover you, but you might want some additional protection with your own policy.
One caveat to this is that it doesn't come into play if you have a permit. You don't need car insurance with a permit, as most car insurance companies extend the parents' policy to include their child - you should contact your insurer to find out. Once you have a license, then you need car insurance; if you aren't added to your parents' policy and don't have your own car, you might opt for a non-owner car insurance policy.
Some non-owner coverage includes rental car coverage. Rental car companies will offer some insurance coverage, but most people will be covered by their own insurance. If you don’t have your own insurance you might be tempted to buy additional coverage from the rental company, which adds a huge cost to an already-expensive rental. So if you find yourself renting a lot – maybe you travel often – it might be more cost effective to have a non-owner policy than paying an extra twenty dollars or more for rental insurance each time.
This also applies to car-sharing services like Zipcar and Car2Go: they’ll offer some insurance, but buying your own can offer additional protection.
There’s an old saying that "you have to spend money to make money." There’s another saying that "you have to spend money to save money on car insurance thanks to continuous coverage discounts." That second one isn’t an actual saying, but it is true.
There are a lot of ways to get discounts on auto insurance. Sometimes it’ll be by renewing your policy, or by bundling it with other policies, or by not getting into accidents. Another discount that’s offered by a lot of insurers is continuous coverage discounts.
Continuous coverage discounts kick in when you don’t have any gaps in your insurance coverage. What constitutes a gap and how long you need to have continuous coverage to be eligible is up to the individual insurer, but Travelers, for example, gives you a discount of up to 15% if you don’t have a gap in your coverage.
If you’ll need auto insurance at some point in the future and are keen on keeping your continuous coverage discount, a non-owner car insurance policy can be a cheap way to keep it going – and as a bonus you’ll be able to drive without fear in the meantime.