Non-owner car insurance
/Non-owner car insurance is one of the least-understood insurance products because it is needed by so few people: most people who drive own a car, and most people who own a car have car insurance. Moreover, even if you don’t own a car but borrow a friend’s car to run the occasional errand, you’re almost certainly covered by their car insurance policy.
Non-owner car insurance thus fills a relatively narrow gap: people who drive often enough to need liability insurance, but not often enough to buy and insure their own car.
Basics of car insurance
Any kind of car insurance policy has four potential components:
personal or medical liability: you hit somebody, they have medical bills or certain other expenses, your insurance covers those expenses.
property liability: you hit something, cause damage to it, your insurance pays the owner for the damage.
uninsured and underinsured motorist: an incident occurs which you are not liable for, but the liable person has too little or no insurance to cover the damage to you or your vehicle, your insurance pays the damages instead.
comprehensive or collision: your car hits something or something hits your car, your insurance repairs or replaces your vehicle. “Comprehensive” coverage differs from “collision” coverage by covering repair or replacement in circumstances besides collisions, most importantly including theft, but also things like severe weather damage or other non-collision incidents.
All car insurance policies cover medical and property liability with minimum statutory limits, and usually include uninsured and underinsured motorist coverage as well. Here in DC all three are mandatory, with slightly different minimum limits for each. If you already own an insured vehicle, then your coverage applies when you rent most cars as well.
Comprehensive/collision coverage is different because unlike the other three, if your vehicle is uninsured, there is no “free rider” problem: if you crash into a wall and the wall is unharmed but your vehicle is totaled, you’re on the hook for the decision to replace your vehicle or not. People who drive older or cheaper cars can and do thus opt out of comprehensive insurance and take their chances, or “self-insure” if you prefer.
Credit card rental car insurance
Virtually all credit cards provide a benefit called something like “Car Rental Loss and Damage Insurance” (American Express) “Auto Rental Collision Damage Waiver” (Chase), or “Secondary Rental Car Collision Coverage” (Discover). The logic here is that all car owners have personal liability, property liability, and uninsured driver insurance, but since some don’t have comprehensive or collision insurance, the credit card will stand in for that fourth leg of the liability stool.
Here credit card bloggers will start to wax about the differences between primary and secondary coverage, but as I’ve written in the past, that distinction only matters if you’re not involved in an accident with another vehicle. If another driver is involved, you’ll have to involve your insurance company anyway, and the benefit of “primary” insurance (keeping the accident “secret”) evaporates.
But what if you don’t own an insured vehicle?
Rental car company insurance
Depending on the rental company and the state, rental cars may already be insured to the minimum required liability and property insurance amounts:
According to Avis’s website: “Avis provides liability coverage for all our vehicles as required by local laws. However, in some states, the coverage provided by Avis is only applied after the renter’s personal insurance has been used to cover all that it can.”
Hertz claims that: “If renting in Maryland, Massachusetts, Michigan, New York, South Carolina, Virginia, or West Virginia: Upon signing the Rental Agreement, Hertz provides primary liability protection. However, such protection is generally no more than the minimum limits required by individual state law. See Financial Responsibility Limits by State” (I was not able to find any such page).
Rental car companies are also happy to sell you supplemental insurance, but this insurance is very, very expensive. The rate for a daily liability insurance supplement at Hertz’s Washington National Airport location is $18.85, which appears to be fairly uniform at the various rental locations I checked (no idea why Portland’s was 7 cents cheaper).
But of course, the reason to carry insurance coverage is not to satisfy the requirements of the law. Insurance is worth paying for if it’s able to protect you against catastrophic losses.
Non-owner car insurance
In the Before Time, my partner and I flew out to Indiana a few times a year for long holiday weekends, and since we didn’t own a car, the supplemental liability insurance was always a pain point. On shorter stays we’d pay it (what’s $15?), on longer stays we’d skip it (who’s got $100 just lying around?).
But since long-distance and air travel are out of the question for the time being, I finally decided to look into non-owner car insurance. The main distinction between non-owner and owner car insurance is simple: the insurance company doesn’t care what vehicle you’re driving, because they’re not responsible for insuring it. Instead, they exclusively cover the personal and property damage you do (and the damage done by uninsured drivers to your vehicle).
Unfortunately, I’ve never found an insurance company willing to offer quotes for non-owner car insurance online. Nerdwallet has a post from over a year ago with the relevant phone numbers for a variety of insurance companies, but that’s the point: they’re phone numbers. Since I happen to already have a renters insurance policy with USAA, I called them first, but I don’t have any reason to believe USAA’s rates are any better or worse than the other options. These rates are purely for the purposes of comparison.
It turned out that the great advantage of non-owner car insurance is that it’s cheap. For a $100,000 per person and $300,000 per accident policy, I was offered a rate of $189.17 for six months (or $31.53 per month). The minimum legal coverage ($25,000 and $50,000) came in a little lower at $24.54 monthly, and what I would call a “supermax” policy of $1 million in personal liability and $500 thousand in property coverage was $47.77 per month.
Conclusion
I’m not here to tell you it’s fun to spend money, or that you should spend money you don’t have to. If you’re an average American travel hacker with an average American car and an average American car insurance policy, this post just doesn’t apply to you.
But for folks who have been overpaying for years or decades for car rental liability insurance by the day, I do want this post to let you know there’s a better, cheaper way.
