While for the most part, an auto insurance policy attaches to a single vehicle, there are many features and options available from insurance companies. Not all companies offer all options, but one product that many carry is non-owned vehicle insurance. Also known informally as car rental insurance, it extends the coverage of a driver’s policy to cover any vehicle that driver uses.
Rental Car Coverage
Though non-owned vehicle insurance covers more than simply car rentals, it’s one of the most popular uses of the endorsement.
Car rental companies add greatly to their revenues by taking advantage of consumers’ general lack of knowledge about car insurance. When you rent, you’ll be offered a collision damage waiver at a daily cost that often exceeds the car rental rate.
If you get into an accident in a rented vehicle, the insurance company isn’t facing a loss, since they have insurance on the vehicles. However, as a term of the rental, they consider you responsible for the damage caused while you’re driving their car. That is unless you purchase the collision damage waiver. Since most rentals complete without incident, this is a pure profit revenue for them in most cases.
You, however, see your rental cost double. Unless your policy carries a non-owned vehicle insurance endorsement. With that coverage in place, you can simply decline the collision damage waiver, knowing that the terms of insurance for your personal vehicle now cover you while driving the rental.
Drivers who rent vehicles a few times a year can easily offset the cost of non-owned vehicle coverage with savings from the refused waiver.
That collision damage waiver isn’t an insurance product, per se, and each insurer sets the terms, without oversight by an insurance regulating body. What this means is that the fine print of the waiver may keep you on the hook for situations you don’t expect. For example, if damage occurs on a gravel road, your waiver may not apply.
Other Non-Owned Vehicle Situations
Should you borrow a vehicle on an incidental basis, the owner’s insurance for that vehicle covers you while you’re driving. However, it covers you only to the extent of the coverage the owner purchased. In most provinces, for example, the minimum required third party liability coverage amount is $200,000. With that in place, a car may legally use public roads. However, in terms of settling at fault accidents, $200,000 is not enough to cover a serious incident. Most drivers carry $1 million or more in liability insurance.
When borrowing a car, however, owner and borrower probably won’t discuss details of insurance coverage. Should an accident happen, only then would the borrower find out the limits of the owner’s coverage. With non-owned vehicle coverage, the borrower remains insured by the terms of their own policy. There’s no concern that they will be caught short by the terms of the other vehicle’s insurance.
You can get an estimate for car insurance including non-owned vehicle coverage through the car insurance calculator at the top of the page here. Simply select ‘car insurance’ from the box on the left and follow the simple on-screen instructions. In 3 minutes, you’ll have up to 10 low-cost insurance estimates.