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. This may include those who rent a car or borrow a friend's car from time to time.

Keep reading to learn what this type of policy covers and some reasons you might need it.

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 they get into an accident and cause injury or damage, this type of coverage will step in. It can 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. It kicks in after the car owner's coverage has been exhausted. Otherwise, the non-owner driver could be legally responsible for any costs over the owner’s limits. 

For instance, let's say you borrow your friend's car to drive. Your friend carries the state’s minimum liability coverage; it includes bodily injury limits of $25,000 per person and $50,000 per accident.

While driving, you hit a family of four. Each person has $25,000 in medical bills. The total costs are $100,000. The car owner's coverage pays for $50,000; the rest of the $50,000 in damages could fall on you, the driver.

According to Mark Ahart, an independent agent with Ahart, Frinzi & Smith Insurance in 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. If you'd had this kind of non-owner car insurance, it would cover the remaining $50,000 in damages.

What Does Non-Owner Car Insurance Cover?

This type of auto liability insurance covers bodily injury if you're determined to be at fault for an accident. This could include hospital treatment, medical bills, and legal fees. Liability insurance also covers property damage such as cars, trees, and more.

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: This is 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: This is 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.
  • A car 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, you can't buy coverage for physical damage with your non-owner insurance policy, also known as collision and comprehensive coverages. The car owner’s policy should have the insurance to cover those costs. But there are some specialty insurers that do offer theft and damage coverage for rental cars.

Note

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

Who Needs Non-Owner Car Insurance?

Non-owner insurance isn’t a common policy. It's most often for four different types of people.

1. You Frequently Rent Cars or Use Car-Sharing Services

Car rental agencies and car-sharing services such as Zipcar must offer the state minimum amount of liability protection. This is required 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 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. It depends on the state you're in. It also depends on the agency you're renting from.

Important

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

2. You Borrow a Car Often

What 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.

3. You Are Mandated to Provide Proof of Insurance 

In some cases, you must provide proof of insurance to meet a requirement. Let's say 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 get a non-owner car insurance policy to meet the requirement. 

4. You Are Between Cars

If you’ve sold a car and are waiting to buy another, you may think you don’t need insurance coverage. But carriers like to see that you haven’t had 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; then, show them your potential rental policy to compare costs. 

What 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 Do You Get Non-Owner Car Insurance?

Many car insurance companies offer non-owner car insurance, such as:

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

Not all insurers offering non-owner car insurance sell it in every state. Calling an independent agent might be wise. It can save you a lot of time searching.

Important

When buying 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). Be sure to include any out-of-state driving. Also, ask what the non-owner policy covers, about any coverage limits, and whether you can 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. It can also depend on whether you have a record in the MVR (motor vehicle records) database. Insurance companies often 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.
  • If you're driving a borrowed or rented car just a few times per month, the savings may not add up.