Non owner auto insurance: myths and realities
by Ed Sneineh,
Chicago Car Insurance Agent
People buy insurance to meet certain financial, social and legal needs. Because people's needs are different then it can follow that whatever is appropriate for someone may not be appropriate for another persons. Non owner auto insurance is one of the most misunderstood coverage in the insurance industry.
Non owner auto insurance provides bodily injury and property damage protection for accidents that results from the negligent acts of the insured while the he/ she is driving a vehicle that is not owned by the insured. The coverage obtained is subject to the same State rules that regulate the auto insurance business.
There are some misconceptions about non owner insurance coverages: The following is a list of key points about non owner insurance:
1. Non owner insurance provides extra coverage, not primary coverage, on the vehicle that you drive. In other words, the vehicle that you drive must be insured as well. State laws require motor vehicles, not humans, to be insured for liability. Therefore your non owner insurance certificate will not be sufficient proof of liability insurance for a non insured vehicle that you drive.
2. Non owner does not offer any coverage if the driver is using a commercial vehicle, or a personal auto that is used for business purposes, such as delivery vehicle.
3. Non owner auto insurance provides liability coverage only and absolutely no physical damage (comprehensive or collision.) This can be problematic when an insured with non owner policy (a 16 year old operator, for example) is using his/her dad's brand new expensive auto where the young driver is not scheduled on the dad's policy. If the young driver is involved in an auto accident while operating that vehicle, the dad's policy may decline all coverage, and the youthful driver's non owner policy will only assume the liability part of coverage, resulting in a situation where there may be no physical damage coverage to take care of the dad's vehicle.
Non owner auto insurance is not meant to substitute regular auto insurance. If someone is supposed to be listed on a particular policy covering a particular vehicle (residents of the same household, or is furnished that vehicle for regular use) then there could be an issue related to the validity of certain coverage in the event of an accident while operating that vehicle. The way to go about this situation is to schedule all the drivers in the household and all the drivers that use the insured vehicle(s) on regular basis.
So what are the applications of the non owner insurance? Non owner auto insurance is used for certain reasons including:
a. Meeting legal requirements. Sometimes the government may require from a person to have auto insurance coverage to meet certain financial responsibility rules related to maintaining driving privileges. If the person does not have a regular auto policy to file with the state then she or he will have to meet that requirement by purchasing a non owner policy. Meeting state financial responsibility requirement through non owner policy is called 'non owner sr22 insurance filing.'
b. Self protection. When a person has doubts about the adequacy or validity of insurance that already exists on vehicles that the person may be driving then a non owner will come to help. Non owner will pay above and beyond what the primary insurance on a particular car pays.
Non owner in business setting
As indicated earlier personal non owner provides auto coverage similar to the coverages that the Personal Auto Policy offers. Non owner is useless in situations where the vehicle used is a commercial vehicle or if the accident happens during using any vehicle for business use (using your friend's vehicle to deliver pizza for a restaurant.)
A similar concept in business insurance exists. The concept is called 'hired and non owned auto' which may be obtained as part of the business owner policy or a commercial auto policy. Hired auto will pay for damages that you, the business owner, may cause while operating a rented car or "non-owned" vehicle for business purposes. Non owned auto refers to paying for damages that you or any of your staff cause while driving any vehicle that you do not own for business purposes (ie you send your employee to make a deposit or to buy office supply using their own car.) Every business needs to pay attention for these coverages if they are needed, because they are optional and additional price must be paid to get them.