Insurance Q&A: “Can I buy car insurance without owning a car?”
You don’t own a car, but want to ensure you’re covered when driving another person’s vehicle. Fortunately, it is possible to purchase liability, medical payment/personal injury protection, and uninsured motorist coverage with a “named non-owner” endorsement to a personal auto policy.
Basically, it’s the same as the personal auto policy someone would have who owns a car, with the exception that there is no physical damage coverage available. Physical damage coverage is excluded by the insurer because there is no way to determine what premium to charge you, as there is not a specific automobile on the policy. Think of it this way; one day you may be driving a BMW valued at $80,000, and the next day a Chevy worth $5,000.
Q: Why would I elect to pay for named non-owner auto insurance if I’m already covered by the owner of the vehicle’s personal auto policy (assuming you have “reasonable belief” you’re allowed to drive their vehicle).
A: There are typically exclusions on a personal auto policy that state if a listed car is regularly made available to you, you must be listed as a driver on the associated policy. With a named non-owner policy, you would have coverage for bodily injury or property damage you are found liable for in the event you are not listed as a driver on the policy.
Let’s look at an example:
You share an apartment with a roommate who owns a car and has state minimum auto insurance. You don’t own a car, but you occasionally drive your roommate’s vehicle. You’re involved in an accident and found liable (at fault) for bodily injury to the other driver as well as damage to the other driver’s car. The damages awarded to the injured party exceed your roommate’s liability limits.
Outcome #1 (You have no insurance): Your roommate’s insurance would pay for the damages up to the liability limits specified in his or her policy. Any additional damages would be paid for from your own pocket.
Outcome #2 (You have Named Non-Owner coverage on your personal auto policy): Your roommate’s insurance would cover damages up to its limit of liability. Your named non-owner coverage would pay for any damages that exceed your roommate’s limits up to your policy limit.
Take note: Named non-owner coverage is always secondary to the vehicle owner’s insurance. If your roommate’s vehicle needed to be fixed as a result of an accident you caused, he or she would require physical damage coverage on their own personal auto policy as named non-owner coverage excludes it.