What Is Non-Owner Insurance?

Definition & Examples of Non-Owner Insurance

Woman and dog in a car
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Non-owner car insurance is an auto policy for people who don't regularly drive—such as those who occasionally rent a car or borrow a friend's car.

Keep reading to learn what this type of policy covers and some reasons you might consider buying this insurance.

What Is Non-Owner Car Insurance?

Non-owner car insurance is a type of personal auto policy that covers drivers who don't own the car they're driving. If a driver doesn't own the car they're driving when they get into an accident and cause bodily injury or physical damages, this type of coverage will step in to help pick up the tab for any auto repair or hospital bills.

How Does Non-Owner Car Insurance Work?

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

For example, imagine you borrow a car to drive. 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 owner's coverage pays for $50,000 and the remaining $50,000 in damages could potentially fall on you, the non-owner driver. 

According to Mark Ahart, an independent agent with Ahart, Frinzi & Smith Insurance in Alexandria, Virginia, a standard non-owner insurance coverage amount is $300,000 bodily injury/property damage combined. In essence, it acts as a type of umbrella coverage. Therefore, if you had this kind of 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 damage (cars, trees, other property) if you're determined to be at fault for 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 injuries you and your passengers experienced in an accident 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
  • Other insurance offerings

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

Depending upon the specifics of the insurer and the policy, 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 

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. The car owner’s policy hopefully has the insurance to cover those costs. 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 sales calls or errands.  

Who Needs Non-Owner Car Insurance?

Non-owner insurance isn’t a common policy and is primarily for four different types of people.

You Frequently Rent Cars or Use Car-Sharing Services

Car rental agencies and car-sharing services such as Zipcar 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 the rental companies, but that can be expensive. 

Non-owner insurance can be a cost-effective alternative. With it, you may be able to decline any liability coverage the rental agency wants to charge you for, but it depends on the state you're in and the agency you're renting from.

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. 

You 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.

You 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. 

You Are Between Cars

If you’ve sold a car and are waiting to purchase another, you may think you don’t need insurance coverage. However, 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 a borrowed or rented car 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. 

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 specific policy rates.

"Those who have speeding tickets and other violations or accidents, or who don't have a record at all, may face much steeper rates," Ahart said. If you don't have a record because you recently moved to the U.S., you might consider signing up for a domestic driver's license to reduce costs.

Key Takeaways

  • Non-owner insurance is a type of auto insurance that covers someone who doesn't own the car they're driving.
  • This type of insurance is best for those who regularly rent or borrow cars.
  • Non-owner insurance coverage kicks in after the owner's insurance coverage has been exhausted.