Auto Insurance When You Don't Own a Car

If I don’t own a car, why would I need auto insurance?

It might seem like a waste of money for a person who does not own a car to purchase auto insurance. There are two situations that can occur here; the person will never drive a car or the person will occasionally borrow a car from a friend or rent a car on vacation. A person who will never drive a car — due to age restrictions, illness, disability, etc. — will probably not need to purchase auto insurance that will cover their own liability. However, they should make sure the driver of the vehicle in which they are a passenger has auto insurance for their passengers. This way, if that person is in an accident as a passenger, their medical expenses will be covered or mostly covered.

A person who doesn’t operate a vehicle but regularly rides as a passenger may want to consider purchasing auto insurance that will cover medical costs that come from an accident. Medical payment coverage and personal injury protection may be beneficial to passengers, whether in lieu of or in addition to their regular health insurance.

The second scenario — a driver not owning a car but borrows a car from a friend — may want to consider purchasing auto insurance depending on how often the car is borrowed. However, even if the car is borrowed once a year that one trip may end up as a disaster of an accident. Most auto insurance companies will cover damages even when the damages were not caused by the policyholder or policy member. As long as the owner of the vehicle gave permission to someone else to drive the car, the auto insurer can cover the damages. Not all insurers follow this rule, so it’s best to know the insurance policy before lending or borrowing a car. The policyholder’s premium will still increase and the deductible will need to be paid. Whether the borrower of the car or the policyholder pays is their decision.

If I’m subleasing a vehicle from someone else, should I get auto insurance?

When you consider the fact that almost every state requires all drivers to carry auto insurance, then it is pretty apparent what the answer to this question should be. You will not get a “free pass” from a law enforcement officer if you are found driving without auto insurance, regardless of whether or not you own the vehicle you are driving.

Usually when a person is subleasing a vehicle, that person is using the vehicle as a regular source of transportation. The more a person drives, the greater the risk of that person being involved in an accident. While the owner of the vehicle (or the original lessee) may have auto insurance for the vehicle, it may be wise for the sublessee to purchase their own insurance policy for their own protection. Any damage done to the vehicle while the sublessee was driving will probably be considered the financial responsibility of the sublessee. To prevent being sued by the owner (or the original lessee), carry enough auto insurance to pay for damages you may cause.

Should I keep my college student — who doesn’t have a car — on my policy while she’s away?

Some auto insurance companies will give the policyholder a discount for students who attend a college that is a certain number of miles away from home and who do not have a car on campus. Keeping your college student on your policy will help them save money, even if you require them to reimburse you the cost. Putting them on their own policy may cost more than it’s worth while they’re not driving at school.

There are also the few times when your college student may need to borrow a car to get to a dentist appointment or drive someone to the airport. If something were to happen during these infrequent driving episodes, your college student will be covered and your cost to repair damages will be less than without having insurance.

I’m renting a car for my beach vacation. I don’t have auto insurance but I’m a good driver so I probably don’t need any insurance.

Sorry, but, wrong! You really could be the best driver on the road, but guess what that would mean? You are surrounded by other drivers who obviously don’t know what they’re doing, and they could cause damage to your rented vehicle. If the accident is a hit-and-run, the other driver is uninsured or underinsured, a chip in the windshield or dent in the door (door-ding), you will be left paying the bill with no aid from an insurance company.

Car rental companies offer their own auto insurance policy for the time period of the trip. It usually comes with a price-per-day and specific terms of coverage. Depending on your budget or desires, you can choose coverage much like choosing a typical policy from an auto insurance company.

Some credit card companies offer rental car insurance, provided you use the card to pay for the rental fees. Each credit card company has their own coverage protection, and sometimes it’s not very thorough. Request a written statement of their terms before you decide to use them as your rental car insurance. If they don’t offer very much coverage, either opt to use the rental car company’s insurance or combine the two for as much coverage as possible.

Auto insurance is too expensive for my budget.

If you plan on never owning a car and never driving any vehicle, then the expense of auto insurance is probably something you need not worry about. Nevertheless, when a random time comes and you find yourself driving down Main Street or the freeway, you may be found breaking the law. As mentioned earlier, almost every state requires all drivers to be insured, mostly so the damages they inflict upon another driver will be financially paid for. Maintaining auto insurance for the occasional times you drive will help you obey the financial responsibility law, as well as cover damages you accidentally cause. Search out different auto insurance companies to see what type of price and coverage they will offer you. It might come as a surprise to how little the cost of your insurance can be.

Get more information on buying non owner auto insurance in California if you don’t own a car.