Do You Need Auto Insurance If You Don’t Own a Car?

You may believe that if you do not own a car, you do not need any auto insurance.  For many people that might be true; true, that is, if they never drive anyone else’s car.  But for those who regularly or frequently borrow someone else’s car, or drive rented vehicles extensively, it may be wise to carry some insurance.  Not a full-blown policy with all the bells and whistles, but one that caters only to the insurance needs of non-owners who drive a vehicle for personal use on a somewhat regular basis. 

Why?  When a person uses the car of a friend or relative who does not live in their household, he is riding on the cushion of the owner's insurance policy. The owner's policy does cover other (permissive) drivers, but the actual liability coverage of the policy may be the bare minimum. Should an accident occur, the liability limits might be so low that when the offended party sues for damages, the one borrowing the car could lose everything he owns.  Any time you drive someone else’s car, you are exposing yourself to the same potential liability as owner-driver, only on a more limited basis.  If, while you are driving your neighbor’s car, you have an accident and damage property or hurt someone, you are potentially liable for his or her damages. Non-owner auto insurance is all about the other guy and having protection against whatever legal claims he might have after you have caused him harm. 

A non-owner auto insurance policy costs less than you're average car insurance. This type of insurance focuses on providing you with sufficient liability insurance that protects you from suffering financial loss or hardship should you get sued by other parties for causing a car accident. It also costs much less than having to pay $10 or $20 dollars a day on rental car insurance on top of the rental fee.  It may not necessarily include medical coverage (in case you're the one who gets injured and needs medical treatment), so you should have a health insurance policy in place or ask about additional medical payments coverage. Collision and comprehensive coverage would normally be excluded from this policy as well, since the car owners themselves are expected to have insurance coverage on the vehicle they let you drive.

At $300-$500 per year, the coverage is actually quite reasonable and can relieve a friend's mind that worries about you borrowing her car on a regular basis.  It is an investment in good will and good sense.  It’s goodwill because one’s friend who is kind enough to lend her car ought to be able to rest assured while you are out running around in it; it’s good sense because you are protecting yourself from potential liability.

Note that non-owner coverage is not for members of one's own household. In other words, the policy cannot be purchased for your teen driver, or for Grandma or Aunt Sophie, if they are living under your roof. The policy will also not cover someone driving a commercial or company vehicle.

A non-owner insurance policy is proof of someone's genuine thanks to another who offers the use of their car. It is also the responsible and prudent thing to do.