Don’t Cancel Your Car Insurance Before Reading This
If you’ve decided to go without a car and free yourself from car payments, insurance coverage, repair and maintenance costs, and purchasing gasoline, then we’re excited for you! We did just that, but we learned that we didn’t want to fully cancel our car insurance, instead we wanted Non-Owner Policy Insurance. Here’s why…
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Don’t Go Without Car Insurance
Selling your car and going without one can be intimidating, but it also comes with a new found freedom! We sold our car and happily gave up a monthly car payment*. Not having a car equals freedom from:
Car payments
Car maintenance
Fuel purchases
Parking/storage arrangements
Registration/Title Fees
Emissions/Smog testing
Car insurance…?
* Truth be told we didn’t have a monthly car payment. We owned a 17-year-old Honda Civic with the intent of driving it 'till it was done. It was a great, reliable car that needed very little maintenance and was great at getting us from point A to B to C. It is not uncommon for Americans to buy a new car (taking out a lease or loan) every 4 to 5 years. We consider this to be a terrible expenditure, especially when the average new car loses 60% of its value in the first five years (Carfax). If that wasn’t enough of a deterrent, you can expect your insurance, registration and taxes to be much higher when owning a new car. Plus, theft is also more likely.
But wait, Why a Question Mark on Car Insurance?
It’s actually not a good idea to cancel your car insurance. It may seem counter intuitive, but there’s a reason.
After some research** we found that even though we no longer own a car, we should keep a form of driving insurance, called Non-Owner Policy Insurance. The coverage of the insurance can range from liability to full coverage, similar to regular car insurance.
**In researching Non-Owner Policy Insurance, we found these articles from Nerd Wallet and The Balance to be helpful.
Why Should I Pay For Non-Owner Policy Insurance?
Renting Cars
Non-Owner Policy Insurance will cover you when you’re driving rental or borrowed cars. It’s typically less expensive than purchasing the insurance options from the rental company, although most rental car company insurance also covers damage to the rental car.
Car Sharing Services
With the rise of the shared economy, this is becoming more and more common. Non-Owner Policy Insurance will supplement the insurance that the car sharing service provides.
Borrowing a Car
While the insurance the owner carries follows the car, your Non-Owner Policy Insurance is considered supplemental insurance. It can possibly cover things the owner’s insurance doesn’t or expenses that exceed their policies’ coverage.
Uninterrupted Coverage/Continuous Coverage
Defined as, “being continuously insured means your insurance coverage from an insurer or more than one insurer was in effect at all times, without a break or lapse in coverage for any reason.” (Source)
“In other words, car insurance companies want to see that you’ve had uninterrupted car insurance, even if you haven’t owned a car. If you have a period of time without coverage, they see you more as a liability when obtaining coverage again. ”
Having continuous coverage may make you eligible for lower rates and discounts with many insurance companies.
It’s Cheaper!
The plus side is that Non-Owner Policy Insurance is cheaper than car insurance when you own a car.
The cost will vary depending on your demographics, as well as the level of coverage you choose. But, expect to see a significant decrease from what you paid when you owned a car.
If you truly won’t be driving, a possible end-around is to be added on to someone else’s policy as a driver of their car. This will show continual coverage. Just keep in mind, if you do drive another car and incur damage, you may be found liable and in a situation where you owe money. We highly recommend against this strategy!
Exceptions to Every Rule
Even though not owning a car seems to be a valid reason for not having car insurance, this isn’t an exception. You still want car insurance, even if you plan on not renting, not borrowing, and not driving a car in any form for a period of time.
However, exceptions to this rule are pointed out by MyCarInsurance123 and TheBalance. If you’re in the military, are a newly licensed teen driver, or you have motorcycle insurance, you may be okay.
As always, be sure to do your own research to be sure you qualify for the exception.
Traveling and Driving Internationally
If you’re traveling internationally, keep in mind that most companies won’t cover you outside of your home country. So, if you’re going to be out of the country, why pay for full coverage when it'll do you no good overseas?
Because of this reason, we opted for liability coverage only. We’ll choose between getting an international policy that’ll cover us overseas, opt for coverage from the rental car company when renting, or pay with a credit card that offers primary rental car insurance overseas (we use the Citi Prestige card).
