Do You Need Auto Insurance if You Don’t Own a Car?

What Is Non-Owner Car Insurance?

Non-owner insurance (also called non-driver insurance) is a form of auto insurance that provides you with liability coverage for any bodily injury or property damage you cause when you're driving a car you do not own. In most cases, the coverage will be the minimum amount your state laws require; however, you can usually add higher levels if you prefer.

Depending on your insurance plan, non-owner insurance may also include medical payments coverage (sometimes called personal injury protection), which covers medical and other costs if people in the car you're driving are injured in an accident. It might include uninsured/underinsured motorist liability insurance, which can help pay medical bills and other expenses if the other driver doesn't have sufficient insurance. Some policies even cover towing services or renting a car to replace the vehicle being repaired.

Non-owner car insurance only covers liability; it doesn't include collision or comprehensive insurance, which cover damage to or theft of the vehicle you're driving. That's because collision and comprehensive coverage are priced based on the specific car you drive. With no way to predict what car you'll be driving as a non-owner (will it be an old beater or a brand-new BMW?), insurers can't offer coverage for the vehicle itself.

Sometimes, non-owner insurance is needed to comply with a court order. If you've had a serious moving violation, such as driving while intoxicated, the court may require you to carry non-owner insurance to keep your driver's license. The insurance company will file what's called an SR-22 document (or an FR-44, in Virginia and Florida), certifying that you have the minimum insurance required by the state.

Who Needs Non-Owner Car Insurance?

Why would you need non-owner car insurance? Here are some common reasons you might want to purchase this coverage even if you don't own a car.

• You want to maintain continuous auto insurance coverage. Insurers like to see a record of uninterrupted care insurance coverage. A break in your coverage—even if you didn't own a car during that period—can make it harder to get auto insurance later on or make it more expensive.
• You rent cars often. If you travel frequently and rent cars on your trips, you may want non-owner insurance. Keep in mind that non-owner insurance doesn't cover damage to or loss of the car itself. For that, you can either purchase the rental car company's collision damage waiver or loss damage waiver coverage, or rent the car using a credit card that provides this coverage.
• You borrow cars frequently. If you borrow a friend's car and get in an accident, your friend's policy will kick in first and your non-owner insurance can cover any liability that your friend's policy doesn't cover. However, if you borrow a car frequently or from someone in your household, a non-owner policy may not cover you. The owner of the car in question should include you on their policy to ensure you're covered should you borrow their car.
• You use car-sharing services like Zipcar and Car2Go. Although these services may provide limited insurance coverage in certain situations, they typically focus on damage to the car rather than injuries to yourself or others. If you use car-sharing services frequently. having your own non-owner insurance can offer peace of mind.

Who Doesn't Need Non-Owner Car Insurance?

Before you rush to buy non-owner car insurance, know that in some situations, it doesn't make sense and isn't necessary. These include:

• You drive a company car, but only for business reasons. Because the vehicle belongs to the company, it should be covered through your employer's commercial auto insurance.
• The car you borrow is insured and belongs to someone you live with. As long as you are listed on their policy, their insurance will cover you. Check and make sure they've added you to their policy before you borrow the car.
• You don't have a driver's license and don't plan to get one in the next 30 days. Without a driver's license, you can't get a non-owner policy—nor should you be driving.
• You own a car and already have car insurance. Your own car insurance will generally provide limited coverage when you borrow someone else's car or drive a rental car. (Check with your insurer to be sure before you hit the road.)

How Much Does Non-Owner Car Insurance Cost?

Non-owner car insurance typically costs less than what you would pay for the same coverage on a car you own. That's because the car itself is a big factor in determining your rates for traditional car insurance. Insurers have to consider how expensive the car is to replace or repair. With non-owner car insurance, your driving history is the most important factor in determining your premiums.

The price for non-owner insurance can also vary depending on your age, how often you plan to drive and other factors that might flag you as high-risk in the eyes of insurers. For example, getting non-owner insurance will cost more if you've had a major driving infraction and need the insurer to file an SR-22 or FR-44.

Is a Good Credit Score Needed for Non-Owner Auto Insurance?

Exactly what constitutes a "good" credit score depends on the credit scoring model being used. Many insurance companies use a credit-based insurance score—which differs from your regular credit score—to set your rates. These scores, specifically designed for the insurance industry, can help predict the likelihood that you'll actually file an insurance claim. (The use of credit-based insurance scores is against the law in California, Hawaii and Massachusetts. In Michigan, credit scores cannot be used to determine rates.)

Having a bad credit score won't necessarily keep you from getting non-owner auto insurance, but it can make the insurance harder to obtain and more expensive. No matter which credit scoring model your insurer uses, you're likely to qualify for better rates if you have a good credit score.

Don't know what your credit score is? You can get a free credit score from Experian to find out. If you'd like to improve your credit score before applying for non-owner insurance, here's what to do.

• Pay your bills on time. Timely payments are the most important factor in your credit score. Set up automatic payments to help you stay current.
• Pay off debt and keep credit card balances low. If you've got a lot of debt, focus on paying it down. Try to keep your credit utilization ratio—the percentage of available credit you're actually using—below 30%. Then avoid using your credit cards so you won't incur new debt.
• Monitor your credit. Keeping a close watch on your credit report and scores can help keep you vigilant in addressing any unexpected changes and spot potential fraud. Experian credit monitoring can help you do this for free.
• Don't apply for new credit unless you absolutely have to. Each time you apply for credit, it generates a hard inquiry to your credit report. Too many such inquiries can cause your credit score to dip.
• Sign up for Experian Boost^®ø. This free service logs your on-time utility and cellphone bill payments on your Experian credit report, which can help boost your Experian credit score quickly.
• Address errors or fraud on your credit report. Get a copy of your credit report from all three credit bureaus—Equifax, Experian and TransUnion—and check for any mistakes or indications of fraud. If you spot something, you can dispute it with the appropriate credit bureau to potentially have it corrected.
• Keep existing credit accounts open. Even if you haven't used a credit card for years, keeping it open increases the amount of available credit you have, which can help you keep your credit utilization ratio low. Disused credit cards may be closed by the issuer after a while, but using the card to make occasional small purchases you immediately pay off can prevent this from happening. Keeping accounts open also extends the length of time you've had credit, which is another factor in your credit score.

Is Non-Owner Auto Insurance Right for You?

If you don't own your own car but frequently drive your friends' cars, use car-sharing services or rent cars, non-owner auto insurance can offer additional protection. You might also need this type of car insurance if you want to maintain continuous insurance coverage during a period when you don't own a car. If your state requires you to file an SR-22 or FR-44 document, getting non-owner insurance might be non-negotiable. As with any type of auto insurance, shopping around and getting your credit score in tip-top shape before you buy non-owner insurance can help ensure you get the coverage you want for the lowest possible premiums.