Individual Non-Owner Car Insurance
The premise is that when you own and operate a car, you should also have the financial ability to handle losses. That is a definite public good since vehicles are large, fast and expensive so losses can involve thousands, tens of thousands or more to pay for repairs or injuries to others.
Perhaps you may think that absent car ownership, a person would be free of any need for a personal auto policy. For the most part yes, since a lack of a car means there’s no danger of one being damaged or it being the cause of damage to others or to the property of others.
However, liability for an auto loss comes most readily from vehicle operation and that does not automatically equate to auto ownership. You could certainly be held responsible for causing an accident while using a vehicle that you do not own.
Non-owned Auto Policy
Though it can be tougher to find a company that offers the protection, there are insurers that sell non-owned auto liability coverage. It works in many cases where you are responsible for an auto accident in a vehicle you do not own. It usually denies coverage for autos you borrow. This exclusion operates when you borrow a vehicle from a person who has their own insurance that would respond to such losses.
So, is non-owned coverage something you need to buy? Consider the following scenarios:
| Driving Situation |
Non-owned Auto Policy |
Other Source of Coverage |
| Driving your employer’s vehicle to a meeting mandated by work and you cause an intersection collision. |
Coverage is unlikely. |
Likely coverage or responsibility would fall to the employer’s business auto insurer. |
| You strike a pedestrian while driving a car borrowed from a friend. It turns out the friend was uninsured. |
Coverage would likely be handled by the non-owned policy. |
The car’s owner could possibly be held financially responsible on an out-of-pocket basis. |
| You have excess/umbrella coverage but you sell off your cars once you retire. |
Such a policy would be helpful as primary auto coverage under an excess/umbrella policy. |
In serious accidents in which your non-owner policy responds, your umbrella would also be available to address the loss. |
| You are in a single car accident while renting a car during a vacation. |
Coverage is unlikely. |
Coverage should be secured from the rental company. Also, coverage may be available via credit card company. |
If you drive but don’t own a car, just evaluate the situations you face to help determine your need for separate coverage. You may want to look into getting the help of an insurance professional if you’re still uncertain.
COPYRIGHT: Insurance Publishing Plus, Inc. 2022
All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.
