What is Non-Owner's Car Insurance?

June 13, 2013

Insurance is a legal requirement for any car you drive, even if you don't own it. Find out more about non owners car insurance policies.

Non owners car insurance is for people who do not have ownership of the cars that they drive. This type of insurance is common amongst people who reside in big cities or metropolitan areas and prefer not to drive a car for reasons like lack of space or high dependence on the city's transit system.

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Many people in these situations prefer to rent or borrow a car on an as-needed basis to avoid the inconvenience of driving their own cars on the city roads. A non owner insurance policy primarily focuses on providing liability protection or coverage in these situations. If an accident happens, the car owner's insurance policy covers the damages. The non owner insurance policy comes into picture only if the liability limit of the car owner's policy cannot cover the damages caused to the car. It does not take precedence over the car owner's policy. If the car owner's insurance cannot afford the entire cost of the damages caused due to the accident, then the non owner insurance policy takes care of the balance.

Advantages of Non Owners Car Insurance

Although it may not be for everyone, getting a non owner car insurance policy can be great for some situations where an individual wants to drive a car or truck from time to time without the burden of owning a vehicle. Some specific aspects of non owner insurance policies can help occasional drivers stay legal and provide coverage for anything that may happen during a trip. Take a look at how non owners insurance policies help those who want to sometimes drive without being named on the registration or title for the vehicle.

  • Low-cost rental insurance. Anyone who has gone to the rental counter can tell you that purchasing the renter's temporary auto insurance can be a lot of money, up to as much as 30% to 40% of the daily rental fee. But some car or truck renters just sign. They may not know that there are alternatives. One alternative is taking out a non owner insurance policy that will cover you as a non owner of a vehicle for repeat trips in a rental car.
  • Urban dwellers. Another group who may want to get non owner policies are those who live in urban areas where owning a vehicle is not necessary. Some of these part-time drivers need occasional insurance, and that's where non owner policies can be a handy solution for the eventual trip in a borrowed ride.
  • Limited-time situations. Another kind of use for non owner policies is when someone is acting as a lot valet, or delivering vehicles to auctions or other destinations cross-country. However, be sure to check with insurers about what kinds of employment relationships may void non owner policies.
  • Peace of mind for the borrower. No matter what the reason is for the trip, or how many miles the driver may go, someone who is driving a vehicle they do not own can rest easy knowing that in the case of a crash, they will be covered for any liability that they cause. Without this kind of coverage, medical bills and more could quickly swamp the driver's finances, and in a routine road stop, they would also be vulnerable to a citation. Non owner policies provide coverage for the "in between" driver.
  • Responsibility. Besides all of what is mentioned above, getting a non owner policy for eventual trips is the safe and responsible thing to do. Some drivers who shrug off the potential for an accident put the entire community at risk, as uninsured accidents ratchet up general costs for insured drivers.
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Disadvantages of Non Owners Car Insurance

Non owner car insurance is meant for very specific situations. In fact, after looking at some of the limitations of the policy, it's unclear to some drivers what kind of benefits a non owner policy would really provide. Some experts would go so far as to say that a non owner policy would only benefit a tiny percentage of drivers on the road. Here are some of the unattractive aspects and limitations of this kind of policy, and some of the reasons why drivers do not generally consider it a "good sell," even though it may technically apply to a short term situation.

  • No collision coverage. That's right, a non owner policy will not cover any damage to the vehicle that someone is driving. It will only cover liability, that is, damages to the other party's vehicle, and medical expenses for the other driver.
  • Only for non owned vehicles. The non owner policy also does not cover work related vehicles, vehicle registered to or owned by the policyholder, or, according to some insurers, even vehicles the policyholder may have "regular access" to. What's left?
  • Complicating the process. In the vast majority of cases, any kind of non owner policy would be made superfluous by the simple addition of an "auxiliary driver" to an existing policy for a vehicle. This addition would often come cheaper than taking out an additional non owner policy for the non owning driver-and it's more efficient, too. The only situation where this wouldn't apply is when the owner of the vehicle doesn't substantially know or trust the driver-and in that case, the owner wouldn't be lending this person their car.
  • Specific limitations. As mentioned earlier, even some "work-related" situations don't lend themselves to a non owner insurance clause. Be sure to ask an insurer what they mean by "work use" for a vehicle. Readers looking at conventional non owner policies will clearly see that these kinds of insurance policies may be relevant to very specific arrangements, say, a valet parking job, or someone who is shuttling vehicles across country to auctions. However, even for these uses, a policy holder should always check exclusions to make sure their policy is relevant to their situation.
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Insurers would point out that uninsured drivers will typically incur legal and financial penalties in the event of an accident, but with all of the regulations and exclusions of a non owner policy, those borrowing vehicles short term will be apt to take their chances, rather than comply. The consequences will be up to law enforcement officials in the field to determine whether a non owner policy would have been required for a specific accident.

What Is Covered in a Non Owners Car Insurance Policy?

Car insurance policy types like this typically protect against certain types of damages that will be covered under standard owner insurance policies, but they will leave out some of the other coverage. Here are the most common damages that are covered under a non owners insurance policy.

  • Catastrophic damage. One of the major points covered in non owner car insurance is catastrophic damage to the car. This involves an accident or a collision that results in the destruction or the functional destruction of the vehicle. This is typically very helpful for people who are renting or leasing a car.
  • Theft. Oftentimes, theft costs are covered under non owner insurance policies for vehicles as well. Theft results in a loss of the entire vehicle value, and this damage can be quite high in terms of monetary payments owed to a renting or leasing company. Therefore, theft is a major factor in many policies.
  • Fire. Fire damage is also a typically covered potential risk in many non owner car insurance policies. Because fire, like theft, may be caused without the volition of the driver of the car, this is a good policy to purchase regardless of how safe you may be and how cautious you are as well.

Different non owner car insurance coverage plans will work differently and may include various types of coverage points. Look around in your area for the combination that works best for you.

Research: Getting the Best Non Owners Car Insurance Rates

When looking into whether you need this kind of policy, take a look at these basic steps to make sure you don't get taken advantage of.

  • Research alternatives. Some common solutions are almost always cheaper alternatives to non owner insurance. If you are using a car that you don't own for a series of trips, see if you can add yourself as another driver to the existing policy on the vehicle. This is often a much cheaper more efficient addition than taking out a non owner policy.
  • Research costs. Take care to look at the specific premium rate options for a non owner insurance policy and measure that against how much you will be using the vehicle. Unless it's a long term arrangement, the policy should not be expensive.
  • Examine coverage for situations. Ask about your specific situation to see if it is covered by a non owner policy. Many "work related" type situations, as well as situations where a vehicle is registered to the policyholder, are all mostly exempt from coverage by a non owner policy.
  • Research coverage for damage. Asking an insurer will reveal that while a non owner insurance policy typically covers liability damages (damages to another driver's car and/or personal injury), it often does not cover any damage to the vehicle being insured.
  • Examine assigned risk insurance plans. This is a term for insurance that is essentially subsidized by the insurance companies, designed for consumers who cannot afford to purchase insurance at the market rate. Don't be dissuaded by the insurance company. All 50 states mandate that insurance companies offer this according to need. Non owner insurance may be valued according to the rates for this type of insurance.
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