Do I Need Car Insurance in Extenuating Circumstances?

Car insurance is a legal requirement even when you think it isn't necessary

Woman Wearing Eyeglasses Sitting In Car
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In most states across the U.S., you’re required to carry auto insurance to drive on public roads. However, there are a few situations where you may think you can go without car insurance, such as if you’re away from home or borrowing your friend’s car. But not having insurance in these types of scenarios is often risky. 

Learn more about the circumstances when you need car insurance even when you may think it isn’t necessary. When you understand your options for carrying insurance, you can minimize risks and avoid higher costs in the future.

Here are seven situations when you think you may not need car insurance and some factors to consider in each scenario.

When You Are Getting Your Driver’s License

New drivers always need car insurance because state minimum insurance requirements apply to everyone, whether you’re getting your driver’s license or still learning to drive. Most new drivers will typically qualify for coverage under their parent’s existing policy, but you shouldn’t always assume they’re covered until you speak to an insurer.

You will likely need to purchase a separate policy when your parents or guardians don't have insurance or if there is a car titled in your name. 

When You Don't Own a Car or Can No Longer Drive

You may think you don't need car insurance if you don’t own a car. But as long as you're a licensed driver who may drive sporadically, car insurance can still be required. 

You should still retain some car insurance for the following reasons:

  • You may need liability insurance. Coverage for liability may not be necessary if you never get behind the wheel of a vehicle, but if you ever drive someone else's car, you could be found liable in the event of an accident.
  • You may need coverage for medical payments in case of injury in a car accident. Sometimes primary health insurance carriers will cover injuries in car accidents, but some may exclude car accidents.
  • You avoid high-risk rates when purchasing your next vehicle. When you have a lapse in your car insurance, no matter the reason, you’ll likely be considered high risk the next time you buy car insurance.

One way to help you stay covered while you don't own or no longer drive a vehicle is to be added as a driver to a friend’s or family member's policy. You could also purchase a non-owner car insurance policy, which is cheaper than a traditional car insurance policy but still provides coverage for liability. Non-owner policies don't cover physical damage to any vehicle.

When You're Leasing a Car

You still need auto insurance if you’re leasing a car. Technically, you don't own the leased vehicle, but you're responsible for insuring it while it's in your possession. Not only is insurance required, but you’ll need to have full coverage.

Gap insurance is sometimes included when leasing a car. Be sure to shop around to get the best rates if you want to add this type of coverage yourself.

When You Are Driving Someone Else’s Car

Unless you’re specifically listed on the owner’s policy, you’re not covered when driving someone else’s car. However, insurance may cover damages up to the policy coverage limits if the car owner gave you consent or permission to operate the vehicle. 

For coverage beyond the owner’s coverage limits, consider non-owners car insurance, which could help cover injuries or damages you’re liable for if the owner’s policy doesn’t cover them. 

When Your Car Breaks Down

Even if you are using your car, say because it’s broken down and in storage, it’s still a good idea to maintain some type of coverage for several reasons, such as avoiding lapsed coverage.  Mishaps could happen even if your car never leaves the garage. 

Dropping coverage may provide some short-term savings on premiums, but the expenses from not having coverage can be greater.

First, you could end up paying more if the policy you’re dropping insurance covers flood, theft, vandalism, or any non-driving damage. Canceling coverage when your car is in a repair shop creates a gap in coverage, which puts you as a high-risk policyholder. This will likely raise your insurance premium when you want to reinstate coverage later. Parked car insurance may be a better alternative to dropping coverage. 

When You’re Away From Home

Instead of dropping coverage while you’re away from home, consider alternatives that can lower your insurance premiums. 

Unless you're required to get a separate policy, a standard auto insurance policy will typically provide out-of-state coverage in all 50 states. College students who live away from home may receive coverage through their parents’ or guardians’ policy, or they might get discounts for good grades.

For military deployment, you may be able to save money by suspending your coverage if no one will be driving your car. Ask your insurer about your options. 

When You Can't Afford Insurance

It can be challenging to manage the high cost of car insurance premiums, but it's essential to make car insurance one of your highest priority bills. It's against the law to drive a car without insurance in most states.

If you’re having a tough time financially, you can reduce your coverage to the bare minimum or shop for low-income car insurance. In the long run, canceling your car insurance will not save you money. An accident, traffic violation, or high-risk insurance rate can easily cost more than what you would pay in keeping your car insurance.

The Bottom Line

You may encounter some situations where you believe you don’t need car insurance. However, it's every licensed driver's responsibility to maintain some form of car insurance. 

Whether you’re listed as a driver on someone else's policy or you take out a non-owner policy of your own, insurance provides coverage that can help protect you from financial harm. And by maintaining coverage, you won't be forced to pay higher insurance rates as a result of lapsed coverage in the future.

Frequently Asked Questions (FAQs)

If my car is paid off, what kind of insurance do I need?

You’ll typically still need comprehensive and collision coverage after paying off your car. However, you’re free to explore your insurance options and decrease coverage you may no longer need. 

Do I need extra insurance when renting a car?

You don’t need extra insurance when renting a car since your personal car insurance policy may provide coverage as long as you drive for personal use. You may seek extra protection through car rental insurance if your policy doesn’t provide collision and comprehensive protection or are only covered under a commercial auto policy.

What happens if someone else is driving my car and gets in an accident?

Your car insurance policy will cover any damage or injuries if someone borrowed your car and got in an accident. However, the driver is responsible for damage or injuries if they are unlicensed or driving without your consent.

Article Sources

  1. Progressive. “Do Learner's Permit Drivers Need Car Insurance?

  2. Progressive. “Do You Need Non-Owner Car Insurance?

  3. American Family Insurance. “Leased Car Insurance Coverage.”

  4. Allstate. “Do I Need Insurance for a Car That's in Storage?

  5. State Farm. “Helpful Car Insurance Tips for College Students.”

  6. National Association of Insurance Commissioners.”Auto Insurance.”