If I Don’t Have a Car, Do I Need Auto Insurance?

Quick Facts About Non-Owner Car Insurance

Non-owner car insurance can provide liability coverage in the event of an accident.
You should still have insurance coverage if you’re a licensed driver who regularly borrows or rents vehicles.
Not all companies offer non-owner insurance policies, so you’ll have to shop around.

Nearly every state requires drivers to carry liability coverage before they get behind the wheel. But not everyone who uses a driver’s license owns a car. So, how do you know if you need auto insurance if you don’t have a vehicle?

The answer depends on whether you drive, how often, and what car you use. Read on to learn about non-owner car insurance.

Do I Need Auto Insurance If I Don’t Have a Car?

There’s no reason to have insurance coverage if you never drive. If you don’t own a car, you aren’t legally required to have an auto insurance policy. If you don’t own but drive a borrowed car occasionally, purchasing insurance may not be necessary if the car’s owner has adequate coverage.

However, buying a policy might make sense if you regularly drive despite not having a vehicle. Insurance coverage can help protect you from shelling out thousands of dollars in out-of-pocket expenses if you’re in an accident.

When Do I Need Auto Insurance If I Don’t Own a Car?

Even if you don’t currently own a vehicle, here are some scenarios where you need coverage.

You’re Buying a New Car

Almost every state in the country requires drivers to have auto insurance. You must have insurance coverage when you’re buying a new or used car before driving it off the lot.

Your insurance company may automatically cover your new vehicle if you already have coverage for a car you’re trading in; however, you need to make your insurer aware of your new car purchase so they can add it to your existing policy.

It’s best to check with the insurance company before buying your new car to ensure you have the protection you need. You typically have seven days to a month to let the insurer know about your new purchase. But rules vary by insurance carrier, and some won’t automatically protect you.

You Live With Someone Who Owns a Car

If you live with someone who has a car and you drive that vehicle, the insurance company may require you to be on the owner’s policy. This is true even if you’re only occasionally in the driver’s seat. If the policy doesn’t include your name, you may not be covered if you have an accident.

You Frequently Rent Cars

When you rent a car, the company may ask for proof of insurance. If you don’t have insurance, you can obtain liability coverage and a collision damage waiver from the rental car company. The liability coverage will help pay for property damage and injuries you cause to someone else, and the collision damage waiver will cover damage to the rental car.

If you only rent a car once a year when you go on vacation, that might be your best option. However, if you regularly drive rentals, purchasing a policy may be cheaper than getting coverage from the rental car company every time you rent a vehicle.

You Need Proof of Insurance

If you have a history of serious driving infractions, your insurance company may need to file an SR-22 or FR-44 form on your behalf. These forms show that you have at least the minimum amount of insurance required by your state. In that case, you need your own policy.

You Borrow Cars

If you borrow someone else’s car, their insurance policy will typically cover you if you’re in an accident. But if their policy liability limits aren’t high enough to pay for the damage or injuries you cause, you could be on the hook for expenses above the policy limit.

Getting your own policy can provide extra protection.

You Drive a Business Vehicle

If you have access to a company car, your employer should maintain insurance on the vehicle. However, the policy limits may not be adequate to fully protect you if you’re in an accident. Purchasing a separate policy can provide additional coverage.

What Type of Car Insurance Do I Need If I Don’t Have a Car?

If you drive but don’t own a car, non-owner car insurance can help you meet your state’s minimum insurance requirements to drive legally. It can also protect you from financial losses if you cause an accident while driving.

What Is Non-Owner Car Insurance?

A basic non-owner car insurance policy provides liability coverage if you’re responsible for an accident. It can cover you when you’re:

Renting a vehicle
Borrowing someone else’s car
Using a car-sharing service
Driving for business

When buying non-owner car insurance, be sure the limits are high enough to cover you if you’re in a serious accident. The minimum liability insurance requirements in most states don’t provide adequate protection. We recommend comparing car insurance to determine which policy provides sufficient coverage.

Some car insurance policies for drivers who don’t own may include medical payment/personal injury protection and uninsured/underinsured motorist coverage. A non-owner policy that only provides liability protection will cover property damage and injuries to other drivers, passengers, and pedestrians in an accident in which you are at fault. It won’t cover injuries you or your passengers sustain. And because non-owner car insurance doesn’t include collision or comprehensive coverage, it won’t cover damage to the car you’re driving.

Non-owner car insurance isn’t for people who own a car, need insurance to buy a car, or are listed as drivers on someone else’s policy.

7 Benefits of Non-Owner Insurance

Liability Protection: In short, a non-owner auto insurance policy primarily provides coverage to other vehicles and their occupants for any accident you cause. That includes property damage and injuries. It even extends to any pedestrians injured. However, it doesn’t include the occupants of the car you are driving. Virtually, every state requires a driver to carry liability coverage.
Saves Money When Renting a Car: Renting a car without auto insurance means you will need to purchase coverage from the rental company. In the grand scheme of things, adding liability coverage to your daily rental fee will probably only set you back $10-$30 per day. However, if you rent cars often or for long periods of time, that extra hit per day can quickly add up.
Maintains Continuous Coverage: Auto insurance companies are leery of covering drivers with sporadic periods of non-coverage. Typically, they view such drivers as a higher risk. Consequently, they won’t issue them a policy or will charge them more if they do choose to cover them. Even though it may seem like a frivolous expense to pay monthly premiums for insurance during a temporary period of non-ownership, it likely will pay off when you need full coverage on a car again.
Extra coverage when car-sharing or for peer-to-peer rentals: A popular personal transportation solution for non-owners is car-sharing with vendors like Zipcar or peer-to-peer rentals like Turo. Both of these rental schemes provide some degree of liability insurance; however, it may not be enough to cover all the expenses resulting from an at-fault accident. Having your own coverage can pickup the slack. RELATED: How Does Turo Work?
Less expensive than full coverage: A non-owner policy primarily provides liability coverage, which makes it more affordable than a full coverage policy.
Protects a borrowed car’s owner: Whether it’s a buddy or a family member, borrowing someone else’s car is a huge responsibility. Any car represents a significant investment for the owner. A non-owner policy will help protect your good Samaritan in the event you cause a crash with injuries and property damage.
Fulfills a state’s proof-of-insurance requirement: In states with SR-22 or FR-44 high-risk-driver requirements for proof-of-insurance, a non-owner policy can allow these problematic drivers to provide the state with the appropriate form without owning a car.

How Do I Get Non-Owner Insurance?

You may need to shop around for a non-owner insurance policy that fits your needs and budget.

How Much Does Non-Owners Car Insurance Cost?

The premiums for non-owner car insurance will vary based on location, driving history, coverage terms, and more. Expect to pay about $800 annually.

The premium is based in part on the car you drive, where it’s parked, and how many miles you drive on an annual basis. When you don’t own a vehicle, you can’t give the insurance company that information.

What Car Insurance Providers Offer Non-Owner Coverage?

Several car insurance providers offer some form of non-owner coverage. Sometimes availability is state-by-state; consequently, you’ll need to contact the company to determine whether it’s available in your state. Likewise, some companies only offer this coverage by phone or visiting an agent. In other words, you can’t apply online. We’ve listed some of the insurance carriers who do issue non-owner policies, along with contact information. Some companies only provide contact numbers as part of their agent search.

Who Might Need Non-Owner Auto Insurance?

Drivers between owning cars: Maintaining continuous coverage makes fully covering the next car easier and often cheaper.
Repeat car renters: Opting for a rental car company’s liability coverage usually averages $30 or less per day. That doesn’t amount to much for occasional short rentals. However, for serial renters or someone renting for a month or more, that daily fee can really add up.
Frequent car borrowers: When a friend or family member is generous enough to lend you a car, the responsible thing to do is protect his or her interest. Even if their auto insurance policy extends to borrowers, a non-owner policy can complement that coverage in the case of an accident you cause.
Car-sharing/peer-to-peer users: Anyone regularly using car-share vendors or peer-to-peer rentals may find the insurance provided by those agencies insufficient to cover a major at-fault accident. A non-owner policy can help cover the gap.
Non-owner drivers with SR-22 or FR-44 requirements: Some high-risk drivers who don’t own a car must have a document filed with the state by the insurance provider that they indeed have auto insurance in order to drive any vehicle.

Who Does Not Need Non-Owner Auto Insurance?

There are some instances where you likely don’t need non-owner car insurance. Individual circumstances will vary. It’s always best to consult with an insurance professional to determine whether non-owner car insurance is right for your unique situation.

Non-Drivers: If you don’t regularly use a car and instead rely on other forms of transportation, such as walking, biking, riding the subway, or taking taxis, there’s no clear need for non-owner car insurance. This is especially true if you don’t have a driver’s license.
Employer Coverage: If you only use your company’s vehicle for work purposes, your employer may provide their own insurance coverage that extends to all employed drivers. In this case, you might not need your own non-owner policy.
Frequent Travel: If you travel often and only rent cars as needed, most rental car agencies offer auxiliary insurance coverage during the rental period. This also applies to car-sharing services like Zipcar and Turo, but it’s important to note their policies may not be enough to cover all expenses after a major accident. As mentioned above, if you rent cars more regularly, it’s still worth it to have your own policy.

Our Take

As a car non-owner, whether you need non-owner insurance depends on whose car you drive and how often. As with most insurance, having it and not needing it is better than not having it and needing it. You may cheat fate occasionally tooling around in your cousin’s car with full coverage insurance. However, the more you drive cars belonging to others, the more you need a non-owner policy. It just makes sense.