Can I Insure a Car I Don't Own?

When you own a vehicle, obtaining auto insurance is a fairly straightforward process. Your reasons for insuring a car are clear. Your name is on the title and registration. However, there are some circumstances where you might ask if you need car insurance on a car that you do not own.

Obtaining auto insurance may be a little more challenging if you don’t own a car, but there are several ways to go about getting coverage.

Do You Need Auto Insurance to Drive a Car You Don’t Own?

No, you can legally borrow someone else’s vehicle without buying car insurance. Almost every state requires the owner to insure their car before they register it. If there is an accident, the liability insurance on the vehicle at fault for the wreck will pay for damages. You would not be liable as long as you had permission from the owner of the car to drive the vehicle. 

However, if you are at fault for an accident and the cost of the other driver’s repairs or medical bills exceeds the policy limits, you may be held liable for the remaining expenses.

The type of insurance coverage the owner of the car purchased determines how well you are covered in case of an accident in their car.

• Liability coverage

• Collision coverage

• Medical payments coverage

When Would You Need to Insure a Vehicle You Don’t Own?

If you plan to frequently borrow the vehicle of a friend or family member, you may want to purchase supplemental insurance coverage, especially if their policy is liability only or has low policy limits.

When Do You Need Non-Owner Car Insurance?

Rather than insuring a particular vehicle, sometimes it makes more sense to buy a non-owner auto insurance policy that covers you as a driver. Some reasons you might want to consider a non-owner policy include:

If you find yourself in a situation where you will be renting a car for an extended period, you will need to carefully consider whether the insurance offered by the rental company provides sufficient coverage. Non-owner car insurance can act as a secondary insurance policy, stepping up to pay the expenses remaining after the rental company insurance has paid to their policy limits.

It may also be worthwhile to compare the price of the rental company’s insurance with the cost of a non-owner policy. The same holds true if you often rent a car for business or vacations.

Car-sharing programs allow you to pay for the use of a vehicle by the minute, hour, or day. Insurance is typically bundled into the price, but coverage may be minimal. If you are using a car-sharing service on a regular basis, it may be wise to purchase non-owner auto insurance to provide supplemental coverage.

If your driver’s license has been suspended or revoked, many states will not reinstate it until you have provided proof of financial responsibility. Purchasing car insurance is usually the best way to fulfill this requirement.

If you are between vehicles, a non-owner policy can prevent a lapse in your insurance coverage. Going without auto insurance coverage can put you in the “high-risk tier”, which will translate to much higher premiums when you apply for car insurance in the future.

If you go without car insurance long enough, you may only be able to get auto insurance from an expensive company that specializes in covering high-risk drivers. Non-owner auto insurance is a relatively inexpensive way to prevent this by maintaining continuous coverage.

Can Someone Else Insure My Car For Me?

If you have been quoted high prices on auto insurance premiums, it may seem like a good idea to have a lower-risk driver purchase an insurance policy on the vehicle. However, that would be considered insurance fraud, which is a misdemeanor in all fifty states. The penalties for insurance fraud can include fines, probation, community service, or jail time.

What Can I Do if My Premiums are Too High?

There are several ways to bring down your rates, but it might take time. 

• Maintain a good driving record from here on out. Some auto insurance companies offer lower premiums as a reward for safe driving. If your rates don’t decrease, it may be time to shop around for a better deal on car insurance.

• Select a higher-deductible policy. If you are in an accident, you will have to pay more out-of-pocket before insurance kicks in, so be sure you have sufficient savings to cover your deductible.

• Take a driving class. Check with your insurance company to find out if you would qualify for a discount if you completed a defensive driving course. Some insurers will lower your rate if you take a qualified safety class.

• If you are a homeowner, hold policies with the same insurer. This can save you up to 25% with some insurance companies.

• Check with your insurer to see what other discounts they offer. Some companies will cut your rate if you sign up for automatic payments, keep your mileage low, or install an anti-theft device.

How Can I Get Car Insurance if I Do Not Own a Vehicle?

The best choice for you will depend on your specific circumstances. The first three possibilities listed below are ways to get insurance on a car that is not in your name. The fourth option is a type of auto insurance that covers the driver rather than a particular vehicle.

Ask the Owner to Add You to Their Policy

If you live at the same residence as the vehicle owner, ask them to put you on their insurance policy as an additional driver. This will increase their premium but is the simplest way to get insurance coverage. 

If you are a college student living in campus housing, your family home is likely still considered your primary residence. In this case, you can typically be covered as an additional driver on the car insurance policy of a family member at your primary residence.

Even if the vehicle owner never actually drives, as may be the case with an elderly relative, they can maintain insurance on the car. You would then be covered by an additional driver as long as you lived with them. 

Ask the Owner if Your Name Can Be Added to the Title and Registration

If the car is paid off, it is just a matter of paperwork to co-title and co-register a vehicle. Once your name is on the title and registration, you can purchase a standard car insurance policy, because you are now one of the owners. If there is a loan or lien on the vehicle, this gets trickier.

Demonstrate Insurable Interest

If neither of the above solutions is a possibility, most states will still allow you to purchase car insurance on the vehicle. New York is the exception, as there is a state law requiring an exact match between the name on the vehicle’s registration and the name on the insurance policy. 

Even in other states, you will first need to prove to the insurer that you have “insurable interest” in the car. 

Purchase Non-Owner Car Insurance

In some cases, a non-owner auto insurance policy may be your best option. It does not insure a specific vehicle but provides liability coverage for you as a driver.

What is Insurable Interest?

“Insurable interest” means that you have a valid reason to obtain an insurance policy on that vehicle. You have enough at stake if the vehicle is damaged that you will have a good incentive to keep it in good working order and protect it by driving defensively.

Why is Insurable Interest Required?

Most insurance companies only want to insure low-risk drivers to protect their profit margin. There are three reasons drivers with insurable interest are a lower risk to the insurer.

A car with worn tires or a broken turn signal is more likely to be involved in an accident. If the vehicle is important to you, you are much more likely to change the oil, replace the windshield wipers, and check coolant levels.

Insurance providers believe you will drive more carefully if damage to the vehicle would have a significant impact on your finances. Statistics bear out their concerns. In one large-scale study, researchers evaluated over 900 car accidents severe enough to cause injury or property damage. They found that almost 90% of these wrecks involved driver-related factors such as speeding, improper braking, and distraction.

A common form of insurance fraud involves purchasing insurance for a vehicle in which the person does not have a vested interest. The insurer wants to make sure you have a valid reason to buy an insurance policy for that car. Otherwise, there is too high a risk that you are setting the stage for insurance fraud.

How Can You Show that You Have Insurable Interest?

Ownership of a vehicle is considered insurable interest because the insurance company believes a car’s owner has a strong enough motivation to protect the vehicle from damage.

If you are not the owner, you will have to demonstrate to the insurer that the vehicle is important enough to you that you will take good care of it. Several factors may be points in your favor:

If you use the vehicle to get to and from work, you have a vested interest in its upkeep.

The insurance company is more likely to gauge that you have insurable interest if you drive the car several times a week than if you borrow it once a month.

Your need to use that particular vehicle as transportation will come into question if you can easily afford a car of your own. You may need to provide evidence that your current income or circumstances do not allow you to purchase a vehicle at this time.

When there is no bus, train, or subway available where you live, this is easy to prove. If there is a stop near your home, you may need to explain why public transportation is not practical to meet your needs. Reasons might include:

• Grocery stores, doctor’s offices, and other necessary destinations are not accessible by public transportation.

• Commuting via public transportation would take too many hours a day to be practical.

• The public transportation schedule does not cover your shift.

• Public transportation in your area is too expensive or unreliable.

What is Non-Owner Car Insurance?

Non-owner auto insurance covers you as a driver, protecting you from liability if you are at fault in an accident. It acts as secondary insurance – non-owner insurance starts paying after the car owner’s deductible has been met and the primary insurance has paid to policy limits. 

What does Non-Owner Auto Insurance Cover?

Typically, non-owner policies provide liability coverage, paying for the medical expenses and/or property damage of the other party if you are at fault in an accident. 

In some areas, you can purchase add-ons such as medical payment coverage, which would cover the accident-related medical bills for you and your passengers, even if you were at fault. 

Less commonly, uninsured motorist coverage may be available as an optional add-on. This would protect you if you were hit by an uninsured vehicle.

If you plan to use non-owner car insurance as coverage when driving a rental car, make sure your policy specifies that it extends to rental vehicles. This is usually the case, but some policies exclude rentals.

Cons of Non-Owner Auto Insurance

1. Insurers usually will not allow you to purchase non-owner insurance if you have use of a vehicle owned by someone who lives in your household. In that case, it makes more sense for you to be added to that car owner’s policy. 

2. A non-owner’s policy cannot stand alone. For a vehicle to be registered – and therefore legal to drive on public roads – the owner must carry liability insurance. 

3. Because non-owner car insurance is not specific to any one vehicle, it does not include collision coverage, comprehensive coverage, or towing/roadside assistance.

Pros of Non-Owner Car Insurance

1. The great news is that non-owner auto insurance is generally much less expensive than standard policies. If you have a decent driving record, a non-owner policy may only cost you $200-500 per year.

2. Most major auto insurance companies offer some form of non-owner insurance, so the likelihood is high that it is available in your area.

3. Non-owner car insurance offers flexibility, covering you whether you are borrowing a friends’ truck, using a local car-sharing service, or renting a car for a road trip. It allows you to pick and choose whichever form of transportation best suits your need at any given moment.