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What Is Non-Owner Car Insurance?

The United States has hundreds of millions of registered drivers, and all drivers must carry auto insurance policies that meet their states’ minimum coverage requirements. Typically, a driver purchases insurance for a specific vehicle he or she owns. However, many licensed drivers do not actually own vehicles, but still drive on a regular basis using rented or borrowed vehicles. These drivers must still maintain insurance coverage if they rent or borrow other vehicles frequently or for extended periods.

The logic behind non-owner car insurance is to protect the owner of a vehicle from insurance issues and liability for the actions of another driver who rents or borrows the vehicle. Like a typical auto insurance policy with liability coverage for the policyholder, a non-owner auto insurance policy offers liability coverage in the event the policyholder causes an accident, but these policies work differently than ownership-based auto insurance policies.

Who Needs Non-Owner Car Insurance?

Many professionals in various industries travel for business on a consistent basis. If an individual travels for business within his or her home region, he or she may use a personal car or company car for work and a personal insurance policy for coverage in an accident. However, many people travel all over the country for work on an irregular basis and owning a car does not make sense with some of these employment arrangements.

  • Traveling salespeople who regularly visit clients across the country would likely find it more effective to rent a vehicle when necessary. If the individual has an auto insurance policy already it will likely apply to rental vehicles in at least some measure, but the individual may not find it worth the trouble to purchase a vehicle if he or she constantly travels for work. A non-owner insurance policy can be an economical way to guarantee at least some protection in an accident.
  • Traveling nurses and doctors often spend time on assignment in one location for a few weeks to a few months and then travel to another area of the country for the next assignment. Like traveling salespeople, owning a vehicle does not always make economic sense to individuals with these work schedules.
  • Teens who earn their drivers’ licenses may not have the money to buy a vehicle immediately after obtaining their licenses. If they use someone else’s car, they must have insurance coverage. Most teen drivers wind up as secondary drivers on their parents’ auto insurance policies, but this is not always an option.
  • Generally, if an individual borrows or rents another driver’s vehicle on a regular basis, the policyholder should add the borrowing driver to his or her insurance policy. If a teen travels for school or work, he or she may need to borrow cars from friends or rent occasionally, and a non-owner policy can be more cost-effective than a typical auto insurance policy.

Maintaining a non-owner auto insurance policy can be a much more cost-effective option than using a rental agency’s auto insurance. Most rental agencies require you to either have your own insurance coverage or purchase their rental insurance, which from some agencies may cost as much as $20 per day. If you rent for weeks at a time while traveling for business, this can add up to much more than it would cost to maintain a non-owner insurance policy.

Explore Your Insurance Options

If you already have car insurance but wonder about what will happen if you rent a vehicle while traveling, review the terms of your policy and see if any clauses indicate if and how your coverage applies to rentals. If it does not, consult your insurance carrier and see if adding a non-ownership or rental clause is available with your policy. If you rent cars frequently, it may still be cheaper to add non-owner coverage to your policy than pay a rental company’s daily insurance rates.