What Is Non-Owner Car Insurance?

If you are a licensed driver and do not own a car, you may still need car insurance. It sounds strange? Keep this in mind: If you are someone who rents cars frequently, you may want to purchase liability insurance to help protect your assets from an accident claim, such as your home and savings.

This is where non-owner auto insurance comes in. It's a good way for drivers who don't own a car to get liability insurance. Liability coverage covers damage and injury to third parties if you cause a car accident.

There are other reasons why you might want to get non-owner auto insurance, such as the legal requirements to prove proof of insurance or to avoid a coverage gap. But not everyone who doesn't own a car needs one. This is what you need to know.

What Does Non-Owner Car Insurance Cover?

If you cause a car accident while driving a rental car, non-owner auto insurance covers:

Physical harm to others, such as medical expenses
Damage you cause to others, such as car repair bills or property damage
Legal defense if a case is filed against you due to a car accident

Depending on the state and your insurance company, you may be able to get medical coverage with a non-owner auto insurance policy, such as:

Uninsured Motorist (UM) Coverage - This coverage pays for your medical expenses if someone collides with you and you have no or insufficient liability insurance. Uninsured motorist coverage can also cover hit-and-run accidents, depending on your condition.
MedPay - This coverage pays you and your passengers for medical bills, regardless of who caused the accident.

Non-owner auto insurance is secondary coverage, which means it begins after any initial coverage has been paid for. For example, if you borrow a friend's car and cause an accident, your friend's car insurance pays first, up to the policy limits. If your policy liability limits are exhausted, non-owner vehicle insurance may pay (including your policy limits).

What’s Not Covered by Non-Owner Car Insurance?

While non-homeowners auto insurance is designed to cover a driver's basic liability insurance needs, there are several common exceptions:

Damage to the vehicle you are driving. Non-owner auto insurance does not include collision or comprehensive insurance, which covers a wide range of issues such as auto theft, fire, flood, hail, riot, vandalism, collision with animals, and falling objects. If someone else causes an accident in the vehicle you are driving, the vehicle owner can file a claim under their own collision and comprehensive insurance, or against the driver's liability insurance.

Injuries sustained in a car accident. If your non-owner auto insurance policy only contains liability insurance, then it will not be covered for injuries sustained in a car accident. If you need coverage for injuries, you may be able to add medical payment coverage.
Other drivers. In general, auto insurance policies only cover non-owners, not your spouse or any other drivers in your household. Some insurance companies will not allow you to get a non-owner auto insurance policy if someone in your family has a personal auto insurance policy.
Business leadership. If you drive a car for business purposes, such as delivering goods to a customer, it is likely not covered by a non-owner auto insurance policy. Commercial use is a common exception to non-homeowner auto insurance policies.

personal items. A non-proprietary auto insurance policy will not cover your lost, damaged, or stolen personal belongings. For example, if someone steals your laptop from a borrowed car, it will not be covered by car insurance. You can have coverage for personal property through homeowner or renter's insurance.

Do I need auto insurance for non-owners?

There are a few reasons why non-homeowners auto insurance is worth getting:

Rent cars often. If you rent cars frequently, you may want to get non-owner car insurance so you don't have to buy liability insurance from the car rental agency.
You don't want a gap in your car insurance coverage. Lack of auto insurance creates a "coverage gap," which auto insurers consider a higher risk, which generally translates to higher auto insurance premiums the next time you shop for auto insurance. Non-owner auto insurance is a good way to avoid the coverage gap if you are between vehicles.
State law requires you to file Form SR-22 (or FR-44). Your state may require you to provide evidence of auto insurance if you encounter problems such as DUI convictions, license suspension or revocation, or if you are caught driving without insurance or other types of problems. SR-22 non-homeowner insurance is a way to get auto insurance without owning a car.

Reasons you don't need non-owner auto insurance

Here are some reasons why you shouldn't need car insurance for non-owners:

You own a car. If you already own a car, you will need a regular car insurance policy.
You drive a car owned by someone in your home. If someone in your family owns a car, such as your spouse or parent, it should be listed on your auto insurance policy.
You borrow a friend's car. If you are in an accident while driving a friend's car, your insurance company will pay. However, if you cause an accident and your liability insurance is insufficient, you may be liable for any damages (such as medical bills or property damage) that your friend's insurance does not cover. If you borrow a lot, it may be worth considering non-owner auto insurance.