Guide to understanding non-owners car insurance

Non-owner car insurance is often used by high-risk drivers who are required to buy a liability policy to keep a driver’s license. But it is also used by drivers who don’t own cars and rent frequently or are trying to keep continuous coverage.

A non-owner policy will generally cost much less than an owner’s policy. The average cost of a non-owners policy is $474. The low rate is because insurance company risk is lower than that of a car owner who drives on a daily basis. The premium amount is, however, dependent upon normal rating factors, such as your driving record and where you live, so you could pay much more than that.

Yes. Guidelines vary, but typically an insurer will require that:

• You have a valid driver’s license.
• You do not own a vehicle.
• Some insurers also require that no one in your household owns a vehicle and that you do not have regular access to a vehicle.

Here are four instances when you may want a non owner insurance policy: 

• As a car renter, the policy serves as primary liability coverage, though you would still need to buy the collision damage waiver (CDW) to pay for repairs to the rental car if your credit card company does not automatically do so.
• As someone trying to maintain continuous coverage, you are avoiding a gap in your insurance history that would get you labeled as a high-risk driver and result in higher rates when you do buy your next car (and insurance policy).
• As a high-risk driver, the policy is typically needed to satisfy conditions to receive or reinstate a driver’s license. If you are required to file an SR-22 or FR-44 with the state -- an insurance company’s guarantee that your coverage is current -- a non-owner SR-22 insurance policy can satisfy that mandate even if you don’t own a car.
• You may own a car, but want to buy non-owner insurance to fulfill state obligations for SR-22 or FR-44 filings. For example, let's say you have a car and you're satisfied with your current insurer, but you need to file an SR-22 or FR-44 and your current car insurance company does not provide this service. You can purchase a separate non-owner policy with another carrier to meet your filing requirements. The extra cost is typically very low because the supplemental non-owner policy isn't covering your car.

Coverage under a non-owner policy includes:

• Bodily injury liability
• Property damage liability

Some insurers also offer as part of a non-owner policy:

• Medical payments coverage
• Uninsured motorist bodily injury coverage
• Underinsured motorist bodily injury coverage

Because a car is not attached to a non-owner policy, you will NOT be offered the following types of coverage:

• Collision
• Comprehensive
• Rental reimbursement
• Towing and labor
• Custom parts and equipment coverage

A non-owner policy will not pay for repairs to a car that you borrow. In fact, if you borrow a friend’s car, you need to verify that the owner has a policy that will extend to you as primary coverage. Your non-owner coverage would pay only in the event that the owner’s coverage limits are reached, and then, only to cover the damages inflicted on the person or vehicle you hit.

A non-owner personal auto insurance policy isn’t for you if:

• You own a car. In this case, purchase a standard owner’s policy.
• There is a vehicle in your household. Normally, in this situation you would be required to be placed on the car owner’s policy as a driver to be covered instead of obtaining a non-owner policy of your own. This is especially true if your spouse owns a vehicle, since an insurer may consider that vehicle your property to insure as well.
• You drive a car on a regular basis. If you don’t own a car but drive someone else’s on a frequent basis, you should be added to that person’s policy as a driver. If you're in full possession of the vehicle, find an insurer that will allow you to place a regular auto insurance policy on that vehicle.
• You are using a vehicle for business use. A commercial non-owner policy, offered by companies such as Progressive, may be better suited for this need.
• You don’t have a driver’s license and cannot obtain one within 30 days of starting a non-owner policy.

Non-owner car insurance costs $474 a year, on average, based on a CarInsurance.com rate analysis. However, depending on where you live and other factors, you may pay twice that, or half.

Non-owner car insurance is cheaper than normal insurance, but the costs vary from company to company. Costs tend to range from 10% to 80% of the price you'd pay for a standard auto policy, says Jarrett Dunbar, a spokesman for Nationwide. Dunbar points out that "much depends on how often the customer has access to a car, how that car will be used and what age the operator is."

The average non-owner cost for California is $286. However, depending on your location, you may pay closer to $200 or nearly $400. Here's how the costs compare between cities in California:

Among the major carriers surveyed, Geico has the cheapest car insurance rate, on average, for a non-owners policy. You'll see how major carriers compare on quotes for non owner insurance.

You apply for a non-owner policy in the same manner you would for an owner’s policy. Not all auto insurance providers offer non-owner policies because this is considered a non-standard policy.

You can contact local independent agents who have access to multiple non-standard carriers or contact your state’s insurance regulator for consumer information on companies offering non-owner policies.

If you have a non-owner insurance policy and you purchase a vehicle, you will need to let your insurer know immediately to change your policy over to an owner’s policy that will cover your new car -- or else you’ll be without coverage on the vehicle.

Yes, Geico does offer coverage for non-owners, as well as many other carriers. Here is a list of companies that offer non-owner coverage:

• State Farm
• Dairyland
• The General
• Safe Auto
• Direct
• Infinity
• Allstate
• Progressive
• Nationwide
• Geico