Jim doesn’t have a car, but his girlfriend, Melanie, lets him borrow hers whenever he needs it. One night, while Jim is driving Melanie’s car, he becomes a bit drowsy and accidentally drives into oncoming traffic, causing a four-car pileup.
Two of the other cars are totaled, and four people, with serious injuries, are transported to the hospital. Fortunately, Melanie’s car insurance policy covers Jim, right? Well, sort of.
You see, Melanie had decided to save money by buying the minimum amount of coverage required by her state. The liability damages of the accident greatly exceeded what her policy will cover. Guess who’s responsible for making up the difference?
This is just one example of a situation where someone who does not own a vehicle would have benefited from carrying a non-owner car insurance policy.
If you are among the millions of licensed drivers in this country who do not own a car, you may want to talk to an independent insurance agent to learn more about your options for coverage during the times that you are driving. Let an agent advise you about whether non-owner car insurance is right for you.
Who Buys Non-Owner Car Insurance?
A non-owner car insurance policy is designed for licensees who do not own a vehicle but still may require liability insurance for a number of reasons:
- A licensed driver who does not own a car but frequently rents one may find that having a non-owner auto insurance policy allows them to pay a lower rate for the insurance required by rental companies.
- If you regularly borrow a car from a friend or neighbor and are not listed as an insured driver on their personal auto policy, you would be wise to purchase a non-owner liability insurance policy, especially if the vehicle owner carries low liability limits.
- If you are attempting to get a driver's license in a state that requires proof of financial responsibility, and you do not own a vehicle.
- A licensed driver whose license is under suspension and needs to file a certificate of financial responsibility but does not own a vehicle can do so using a non-owner car insurance policy.
- If you have been insured for some time but are between cars, non-owner car insurance is a way to stay insured so your continuous coverage is not interrupted. It will also help you remain a loyal insurance customer.
Vehicle Owners and Non-Owners in the U.S.
According to the U.S. Office of Highway Policy Information, the number of licensed drivers in the U.S dramatically increased from 163 million in 1988 to over 210 million in 2010. According to the U. S. Department of Transportation, about 8% of licensed drivers do not own a vehicle.
Households with an annual income of less than $25,000 are nine times more likely not to own a vehicle than households with income of more than $25,000. Households residing in rental properties are six times more likely to be no-vehicle households compared with non-renters.
This applies also to households renting condos or apartments. Additionally, 19% of single-person households have no vehicles compared with only 4% of multi-person households.
Non-Owner Policy Coverages
The most apparent difference between a non-owner car insurance policy and the usual personal auto policy is that a non-owner policy is primarily third-party coverage, whereas the personal auto policy provides first-party and third-party coverage.
Also, non-owner car insurance provides coverage for the named insured only, and no other drivers can be listed on the policy.
- Bodily Injury Liability: This pays for medical expenses that you are liable for in the event of an at-fault accident.
- Property Damage Liability: If you or another insured driver is in an at-fault accident, property damage coverage pays to repair or replace the other driver's vehicle or property.
- Uninsured Motorist: This pays if you are injured in an accident by another driver who is uninsured or underinsured or if it is a hit-and-run accident.
- Medical Payments: Medical coverage pays for your injuries and the injuries of passengers in your vehicle no matter who's at fault in an accident.
A non-owner insurance policy does not provide physical damage coverage, also known as comprehensive and collision. Non-owner car insurance does not cover damage to any vehicle.
It provides liability coverage for the named insured (you) if you are in an at-fault accident. It can also cover you for injuries caused by an uninsured or underinsured driver if you select this coverage.
Who Should Not Buy Non-Owner Car Insurance?
There are times when a non-owner auto insurance policy may seem reasonable, but in reality it's not, as in these cases:
- You have regular access to a vehicle, like a neighbor's or family member's, and you are listed as a driver on that person's policy.
- You live with your parents and have permission to drive their vehicle, and their insurance company requires that you be listed as a driver on their policy. A non-owner car insurance policy isn’t necessary.
- You do not own a vehicle and you rarely rent or borrow one. In this case, you may want to forgo the cost of non-owner car insurance.
When Is a Certificate of Financial Responsibility Needed?
Most states require licensees with suspended licenses due to uninsured accidents, DUI/DWI convictions or other offenses to file a certificate of financial responsibility (SR-22) as proof of insurance in order to reinstate their driving privileges.
If this is a requirement for you and you don't own a vehicle, a non-owners auto insurance policy is the way to get this resolved. When you purchase your policy, your insurance carrier sends the SR-22 form to the state where you were licensed so the reinstatement process can begin.
It's important to note that the SR-22 form does not affect your insurance rates, but your reason for needing it certainly will.
For licensees in the U.S. who do not own a vehicle but are concerned about liability protection when driving non-owned vehicles, the solution is a non-owners insurance policy with sufficient limits to meet their needs.
Where to Find Non-Owners Insurance
The best way to shop for non-owners car insurance with affordable rates is by contacting a local independent agent.
Our agents have access to a number of insurance companies and will be able to shop around for multiple quotes to deliver an insurance package that meets your individual needs and budget. Find a local agent today to get a non-owners car insurance quote.