What Is Non-Owner Insurance?

Definition & Examples of Non-Owner Insurance

Woman and dog in a car
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If you frequently rent cars or borrow a friend’s car, you might need non-owner car insurance. If you’re ever involved in an accident while driving a borrowed or rented car, non-owner car insurance can save you from financial ruin. Serious accidents cost tens of thousands of dollars in medical expenses. That’s a tab you can happily hand over to your non-owner car insurance company.

What Is Non-Owner Car Insurance?

Non-owner car insurance is a type of personal auto policy that covers claims if you cause bodily injury and physical damages to others in an accident where you’re at fault—yet don’t own the car you’re driving at the time.  

Non-owner insurance acts as secondary insurance that kicks in after the first car's owner coverage has been exhausted. Otherwise, you could be legally responsible for costs exceeding the owner’s limits. 

For example, imagine the car’s owner carries a state’s minimum liability coverage, which includes bodily injury limits of $25,000 per person and $50,000 per accident. You hit a family of four, and each family member has $25,000 in medical bills. The total costs are $100,000. The remaining $50,000 in damages could potentially fall on you, the driver. 

The non-owner insurance provides additional coverage, in the amount you choose. According to Mark Ahart, independent agent with Ahart, Frinzi & Smith Insurance in Alexandria, Virginia a standard amount is $300,000 bodily injury/property damage combined. In essence, it acts as a type of umbrella coverage

In the previous example, if you had non-owner car insurance, the policy would cover the remaining $50,000 in damages.

What Does Non-Owner Car Insurance Cover?

This type of auto liability insurance covers bodily injury (hospital treatment, medical bills, and legal fees) and property (cars, trees, other property) damage to others, if you're determined to be at fault or to have caused an accident. 

With some non-owner policies, in addition to bodily injury and property damage coverages, you can also include or add on:

  • Uninsured and underinsured motorist liability coverage: For your injuries and passenger injuries caused by an at-fault driver who is uninsured or underinsured
  • Medical payments or personal injury protection (PIP) coverage: For injuries you and your passengers experienced in an accident where you were at fault
  • Roadside assistance, renter’s insurance, or other insurance offerings

What Isn’t Covered by Non-Owner Car Insurance?

Depending upon the insurer, non-owner car insurance may not cover: 

  • Spouses and other household members 
  • An auto owned by you or household family members
  • Cars you use for business  
  • Medical expenses for yourself and your passengers if you’re at fault  

Most non-owner insurance policies won’t cover physical damage that happens to the vehicle you’re driving—the car owner’s policy hopefully has the insurance to cover your $5,000 fender-bender, a theft, or the freak hailstorm that damaged the car. 

For the most part, it’s not possible to purchase coverage for physical damage with your non-owner insurance policy, also known as collision and comprehensive coverages. However, some specialty insurers do offer theft and damage coverage for rental cars.

Non-owned policies and non-owner policies are sometimes confused. Non-owned policies are commercial auto coverage that protects business owners when employees drive their personal auto for business purposes, such as sale calls or errands.  

Who Needs Non-Owner Car Insurance?

Non-owner insurance isn’t a common policy and is primarily for three different types of people, Ahart said. Non-owner car insurance is for those who:

Frequently Rent Cars or Use Car-Sharing Services

Car rental agencies and car-sharing services such as ZipCar and Car2Go must offer the state-required minimum amount of liability protection for their cars to operate legally on the roads. But that may not be enough to cover serious crashes. You can often pay for more liability coverage from those companies, but that can get pricey if you do it frequently. 

Non-owner insurance can be a cost-effective alternative. With it, you may be able to decline any liability coverage the agency charges for, depending on where you're renting and the agency. "We do recommend it if you don't own but are renting cars often,” Ahart said. “It's relatively inexpensive and can save money versus continuously taking out a liability policy with a rental agency," Ahart said. 

If you do get a non-owner policy because you rent cars often, you still may want to take out physical damage coverage by accepting the car rental company's collision damage waiver (CDW), because it’s not included in a non-owner policy. Or check with your credit card company to see if your card includes rental car insurance and if so, what’s included. 

Borrow a Car Often

If you regularly borrow a car from someone else, you may want to extend coverage in case the car’s owner doesn’t carry high enough limits. "You don't always know which or how much insurance your friends or family members carry,” Ahart said.

Are Mandated to Provide Proof of Insurance 

If you were convicted of a major traffic offense and courts mandate an SR-22 (or FR-44 in Florida and Virginia), despite not having a car, you can obtain a non-owner car insurance policy to meet the requirement. 

Are Between Cars

If you’ve sold a car and are waiting to purchase another, you may think you don’t need insurance coverage. But carriers like to see that you haven’t experienced any gaps in coverage. “To maintain continuous coverage and have the best rates available when purchasing a new car, some individuals do opt to purchase the non-owner policy,” Ahart said. 

Who Doesn’t Need Non-Owner Car Insurance?

If you're driving just a few times per month, the savings may not add up. However, if you're borrowing a friend's car 20 times per year or more, or renting cars more than 12 times per year, a non-owner policy might be a good idea, Ahart noted. You can always ask for a quote from an insurance agent, and show them your potential rental policy to compare costs. 

If you're regularly driving a household family member's car or are a live-in employee (such as a nanny or au pair), you can probably be added to an auto policy as a listed household driver. 

But you probably can’t get added to an unrelated roommate’s or friend’s auto policy; in that case, you could research non-owner insurance options. 

How to Get Non-Owner Car Insurance

Several car insurance companies offer non-owner car insurance, such as

  • Acceptance Insurance
  • Allstate
  • Dairyland
  • Direct Auto
  • Farmers Insurance
  • Nationwide
  • Progressive
  • State Farm
  • The General Insurance

Not all insurance providers offering non-owner car insurance sell policies in every state. Calling an independent agent might be wise, and will save you lots of checking around. 

When purchasing a non-owner policy, describe exactly how often, where and what you plan to drive (such as a rental car or a friend’s car), including any out-of-state driving. Ask what the non-owner policy covers, about any coverage limits, and if it’s possible to include additional types of coverage. 

How Much Does Non-Owner Car Insurance Cost?

Policy rates will mostly depend upon the amount of liability coverage you choose and whether you have a record in the MVR (motor vehicle records) database. Insurance companies typically search these databases before offering a policy and the rates. 

Those who have speeding tickets and other violations or accidents, or who don't have a record at all—because they're from another country—may face much steeper rate, Ahart said. You might sign up for a domestic driver's license if you’re living in the U.S. for a while as a nanny or au pair to reduce costs. 

Article Sources

  1. National Safety Council. "Costs." Accessed Sept. 16, 2020.