Nearly every state requires drivers to have 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 car?
The answer depends on whether you drive, how often, and what car you use.
Maybe. If you never drive, there’s no reason for you to have insurance. If you don’t own a car and only drive occasionally, purchasing insurance may not be necessary if the car’s owner has adequate coverage. But if you regularly drive, despite not having a vehicle, buying a policy might make sense. Having insurance can help protect you from shelling out thousands of dollars in out-of-pocket expenses if you’re in an accident.
Even if you don’t currently own a vehicle, here are some scenarios where you will need to get coverage.
Almost every state in the country requires drivers to have auto insurance. If you’re buying a car and don’t already have coverage on another vehicle, you need to purchase insurance before driving your new (or used) vehicle off the lot.
If you already have insurance on a different car, your insurance company may automatically cover your new vehicle. But you need to call the insurer and let them know you bought a new car so that they can add it to your existing policy.
You typically have seven to 30 days to let your insurer know about your new purchase. But rules vary by insurer, and some won’t automatically protect you. So, check with the insurance company before buying your new car to ensure you have the protection you need.
If you live with someone who has a car and you drive it, the insurance company may require that you be added to the owner’s policy. This is true even if you only drive it occasionally. If you’re not listed on the policy, you may not be covered if you drive the car and get into an accident.
When you rent a car, the company will ask to see 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. But if you regularly drive rentals, purchasing a policy may be cheaper than getting coverage from the car company every time you rent a vehicle.
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.
If you borrow someone else’s car, their insurance policy will typically cover you if you’re in an accident. But if their policy limits aren’t high enough to pay for the damage or injuries you cause, you could be held liable for expenses above the policy limit.
Getting your own policy can provide extra protection.
If you have access to a company car, your employer should maintain insurance on the vehicle. But 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.
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.
A basic non-owner car insurance policy provides liability coverage if you’re responsible for an accident. It can cover you when you’re:
When buying non-owner car insurance, make 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.
Some non-owner car insurance policies may include medical payment/personal injury protection and uninsured/underinsured motorist coverage. But if a policy only provides liability coverage, it will cover damage and injuries you cause to other people. 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.
You may need to shop around to find a non-owner insurance policy that fits your needs and budget. “Not many companies offer it, but when they do, it tends to be pretty expensive,” says David Miller, vice president of The Plexus Groupe, a national insurance brokerage based in Illinois.
“The premium is based [in part] on what kind of car you’re driving, where the car is parked, and how far you’re driving it,” says Miller. When you don’t own a vehicle, you can’t give the insurance company that information. “If there’s uncertainty in terms of how to price for the risk, most companies are going to err on the side of caution and charge more,” he said.
