Advice

If I Don’t Have a Car, Do I Need Auto Insurance?

By 09/08/2023 4:01pm

Insurance when you don't own a car

Quick Facts About Non-Owners Car Insurance

  • Non-owner car insurance can provide liability coverage in the event of an accident.
  • You should still have insurance coverage if you’re a licensed driver who regularly borrows or rents vehicles.
  • Not all companies offer non-owner insurance policies, so you’ll have to shop around.

Nearly every state requires drivers to have liability coverage before they get behind the wheel. But not everyone who uses a driver’s license owns a car. So, how do you know if you need auto insurance if you don’t have a vehicle?

The answer depends on whether you drive, how often, and what car you use. Read on to learn about non-owners car insurance.

Do I Need Auto Insurance if I Don’t Have a Car?

There’s no reason to have insurance coverage if you never drive. If you don’t own a car, you aren’t legally required to have an auto insurance policy. If you don’t own but drive a borrowed car occasionally, purchasing insurance may not be necessary if the car’s owner has adequate coverage.

However, buying a policy might make sense if you regularly drive despite not having a vehicle. Insurance coverage can help protect you from shelling out thousands of dollars in out-of-pocket expenses if you’re in an accident.

When Do I Need Auto Insurance if I Don’t Own a Car?

Even if you don’t currently own a vehicle, here are some scenarios where you need coverage.

1. You’re Buying a New Car

Almost every state in the country requires drivers to have auto insurance. You must have insurance coverage for the vehicle you’re buying before driving the new (or used) car off the lot.

Your insurance company may automatically cover your new vehicle if you already have coverage for a car you’re trading in. But you need to call the insurer and let them know you bought a new car so they can add it to your existing policy.

It’s best to check with the insurance company before buying your new car to ensure you have the protection you need. You typically have seven days to a month to let the insurer know about your new purchase. But rules vary by insurance carrier, and some won’t automatically protect you.

2. You Live With Someone Who Owns a Car

If you live with someone who has a car and you drive that vehicle, the insurance company may require you to be on to the owner’s policy. This is true even if you’re only occasionally in the driver’s seat. If the policy doesn’t include your name, you may not be covered if you drive the car and get into an accident.

3. You Frequently Rent Cars

When you rent a car, the company may ask for proof of insurance. If you don’t have insurance, you can obtain liability coverage and a collision damage waiver from the rental car company. The liability coverage will help pay for property damage and injuries you cause to someone else, and the collision damage waiver will cover damage to the rental car.

If you only rent a car once a year when you go on vacation, that might be your best option. But if you regularly drive rentals, purchasing a policy may be cheaper than getting coverage from the car company every time you rent a vehicle.

4. You Need Proof of Insurance

If you have a history of serious driving infractions, your insurance company may need to file an SR-22 or FR-44 form on your behalf. These forms show that you have at least the minimum amount of insurance required by your state. In that case, you need your own policy.

5. You Borrow Cars

If you borrow someone else’s car, their insurance policy will typically cover you if you’re in an accident. But if their policy limits aren’t high enough to pay for the damage or injuries you cause, you could be held liable for expenses above the policy limit.

Getting your own policy can provide extra protection.

6. You Drive a Business Vehicle

If you have access to a company car, your employer should maintain insurance on the vehicle. However, the policy limits may not be adequate to fully protect you if you’re in an accident. Purchasing a separate policy can provide additional coverage.

What Type of Car Insurance Do I Need if I Don’t Have a Car?

If you drive but don’t own a car, non-owner car insurance can help you meet your state’s minimum insurance requirements to drive legally. It can also protect you from financial losses if you cause an accident while driving.

What Is Non-Owners Car Insurance?

A basic non-owner car insurance policy provides liability coverage if you’re responsible for an accident. It can cover you when you’re:

  • Renting a vehicle
  • Borrowing someone else’s car
  • Using a car-sharing service
  • Driving for business

When buying non-owner car insurance, be sure the limits are high enough to cover you if you’re in a serious accident. The minimum liability insurance requirements in most states don’t provide adequate protection. You can always compare insurance policies to see which policy covers enough of what you need.

Some car insurance policies for drivers who don’t own may include medical payment/personal injury protection and uninsured/underinsured motorist coverage. But if a policy only provides liability coverage, it will cover damage and injuries you cause to other people. It won’t cover injuries you or your passengers sustain. And because non-owner car insurance doesn’t include collision or comprehensive coverage, it won’t cover damage to the car you’re driving.

Non-owner car insurance isn’t for people who own a car, need insurance to buy a car, or are listed as drivers on someone else’s policy.

How Do I Get Non-Owner Insurance?

You may need to shop around for a non-owner insurance policy that fits your needs and budget. “Not many companies offer it, but when they do, it tends to be pretty expensive,” says David Miller, vice president of The Plexus Groupe, a national insurance brokerage based in Illinois.

How Much Does Non-Owners Car Insurance Cost?

The premiums for non-owner car insurance will vary based on location, driving history, coverage terms, and more. Expect to pay about $750 annually.

“The premium is based [in part] on what kind of car you’re driving, where the car is parked, and how far you’re driving it,” says Miller. When you don’t own a vehicle, you can’t give the insurance company that information. “If there’s uncertainty in terms of how to price for the risk, most companies are going to err on the side of caution and charge more,” he said.

Who Does Not Need Non-Owner Insurance?

There are some instances where you likely don’t need non-owner car insurance. Individual circumstances will vary. It’s always best to consult with an insurance professional to determine whether non-owner car insurance is right for your unique situation.

  1. Non-Drivers: If you don’t regularly use a car and instead rely on other forms of transportation like walking, biking, riding the subway, or taking taxis, there’s no clear need for non-owner car insurance. This is especially true if you don’t have a driver’s license.
  2. Employer Coverage: If you only use your company’s vehicle for work purposes, your employer may provide their own insurance coverage that extends to all employed drivers. In this case, you might not need your own non-owner policy.
  3. Frequent Travel: If you travel often and only rent cars as needed, most rental car agencies offer auxiliary insurance coverage during the rental period. This also applies to car-sharing services like Zipcar and Turo, but it’s important to note their policies may not be enough to cover all expenses after a major accident. As mentioned above, if you rent cars more regularly, it’s still worth it to have your own policy.

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