Non-Owner Car Insurance: Liability Coverage for Car-Free Drivers
Nearly 10 percent of U.S. households do not own a car, according to a 2014 study by the University of Michigan Transportation Research Institute. In major cities such as New York, Boston, Philadelphia, and Washington, a third or more of households are car-free. Are you part of this trend?
If so, you may still need to drive a car from time to time. And, by getting behind the wheel, you may be opening yourself up to a great deal of liability if you don’t have the proper insurance coverage.
That’s where a non-owner’s policy comes in: It keeps you covered whether you’re renting, car sharing or borrowing a car from a friend. To learn more about this type of insurance, how much it costs and who should get it, continue reading below.
What Is Non-Owner Insurance & How Much Does It Cost?
Non-owner car insurance provides liability coverage to people who don’t own a car. Like standard liability insurance, it covers car damage and injuries to other people when you are at fault, but it will not cover your own injuries or damage that occurs to the vehicle you are driving. Because you are purchasing your own insurance instead of relying on other people’s policies, you are able to make sure you have adequate coverage to protect your assets.
You can qualify for non-owner liability insurance if you have a valid driver’s license and do not own a vehicle. Some insurers will not write a non-owner policy if there are vehicles in your household that you have access to.
Typically, the premiums for a non-owner insurance policy will range from around $200-500 a year. However, the amount of coverage you choose, your driving history, your location, and your driving frequency will affect the cost of your policy.
Non-owner insurance policies do not have a deductible.
Who Should Consider It?
Non-owner insurance might be a beneficial if:
- You’re seeking to get your license reinstated after a serious infraction. If your license is suspended after you are convicted of a DUI or other serious offense, state laws will require you to file an SR-22 or an FR-44” to get your license reinstated. As part of this process, you will have to certify that you have purchased car insurance. If you do not own a car, purchasing a non-owner insurance policy will meet state requirements.
- You frequently rent cars. Most states require car rental companies to provide the state minimum levels of liability insurance as part of the basic rental fee. But in many cases those state minimums cover very little, and there are exceptions, such as California, where rental companies are not obligated by law to provide liability protection.
You can buy additional liability insurance at the rental counter, but this coverage will cost you $10-16/day. Paying with a credit card provides you with coverage for damage to the rental car, but bank cards provide no liability insurance protection. So if you rent cars more than a few times a year and you want more than the minimum level of liability coverage, your own non-owner policy may be the most affordable option.
- You join a car sharing service. Car sharing companies include some level of liability coverage as part of the rental fee. Zipcar, for example, provides its members $300,000 in combined bodily injury and property damage liability coverage per accident. But you’re responsible for a $750 “damage fee” before this coverage kicks in. Car sharing services generally offer extra coverage or reduced deductibles for an additional annual fee – Zipcar’s “damage fee waiver” is $79/year, for example. Choosing a non-owner policy instead will cover you when you’re driving any car, not just a car-sharing vehicle.
- You are borrowing a car from a friend or family member. When you drive someone else’s car, expenses from an accident will generally be covered under the owner’s insurance policy. But then the car’s owner is choosing the level of coverage, not you. And if there are problems with claims, you’re not the insurance company’s customer. Under your own policy, you can be certain you have adequate liability coverage.
- You’re temporarily between cars. If you’re car-free in the near term but plan to buy a car soon, a non-owner insurance policy is an inexpensive way to maintain continuous coverage and long-term customer status. It will also provide you coverage as you are test-driving vehicles. When you do buy a car, you will need to inform your insurer immediately and switch to an owner’s policy.
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