Many Americans are now finding themselves in a very interesting predicament: they don’t own a car, but they occasionally drive. A lot of these people are putting themselves in serious financial risk because they don’t have car insurance.
It is hard for some people to believe, but you may still have to buy car insurance, even if you don’t own a vehicle. The reason for this is that a driver can be held liable for an accident, even if he or she doesn’t own the vehicle he or she is driving. That means you can be sued over an accident you get into driving a car you don’t own.
Why You, a Non-Car Owner, Might Need Insurance
Something to remember is that personal injury attorneys go after one of two groups, those with the deepest pockets or those who are least capable of defending themselves. In some cases, that’s the insurance company, but it can be an individual.
Let’s say that a young executive with a good salary who lives in a loft downtown and doesn’t own a car is visiting her grandmother who gets by on Social Security. She borrows grandmother’s old Chevy and gets in an accident where somebody gets hurt. Who do you think the personal injury attorney is going to go after?
The situation could be made worse because grandmother’s insurance may not cover the executive. That means she might be responsible for any damages out of pocket.
Okay, that’s the nightmare scenario, but there’s some good news here – the insurance industry has a product for people who don’t own a car, but drive. It’s called non-owners insurance and it’s fairly cheap.
What is Non-Owners Auto Insurance?
A typical car insurance policy consists of collision insurance and liability insurance. Basically, collision insurance covers damage to your vehicle. Liability insurance covers damage that you might cause in an accident.
A person who drives, but doesn’t own a car only needs liability insurance. Liability insurance protects your financial assets from lawsuits and other claims. It will reimburse the victim of an accident or pay for a lawyer to protect you if a personal injury attorney comes after your money.
Who should get Non-Owners Auto Insurance?
Here are a few people who should get non-owners insurance:
- Anybody who doesn’t own a car, but regularly borrows a vehicle from somebody else, such as a friend or a relative. Contrary to popular belief, their policy may not cover you. Note: if you use somebody else’s vehicle a lot, you could protect yourself by having your name put on their insurance policy.
- A person who rents cars a lot. Non-owners insurance is cheaper and more comprehensive than rental car insurance. Some rental insurance policies can cost as much as $10 a day. Some non-owners’ policies can cost as little as $20 a month.
- Anybody who regularly uses car-sharing services such as Zipcar. Yes, these companies provide insurance, but it may not protect you in case of an accident. Something to remember is that if you are found liable, the company’s insurance policy may not cover you. Persons who regularly use rental trucks might be in the same predicament.
- If you have a bad driving record. Some states, including Virginia, require persons with a serious infraction, such as a DWI on their record, to carry their own insurance when driving any vehicle.
When you will Not Need Non-Owners Insurance
There is one time when a non-car owner probably won’t need non-owners insurance. That is when you are driving the company car or another vehicle owned by your employer. In that situation, the company will usually provide insurance.
Be careful in this situation though, because you might still be held liable if you are not using the company car for company business. You could also get into trouble if you use the company car without permission. Check with your boss or whoever’s in charge of insurance at your employer. You might not be covered if you do not sign the company’s contract or waiver
The Good News about Non-Owners Insurance
Okay that’s the bad news, but here’s the good news – non-owners insurance usually costs a lot less than regular car insurance. If you have a good driving record, it can be as little as $20 a month or $250 a year in some states.
Try shopping around for it; most car insurance companies offer it and many of them are eager to sign up non-owners. The reason for this is that non-owners insurance is actually more profitable for insurance companies. They only have to offer basic liability coverage.
If you don’t own a car, but you drive, you still need to protect yourself from lawsuits. Non-owners insurance provides that protection.