Insuring a car you don’t drive

Insights:

Even if you don’t own a car, it may be a smart idea to have a non-owner car insurance policy. 

Car insurance helps protect you if your car gets damaged or your vehicle causes injuries or damages. 

There are many car and insurance scenarios that aren’t so straightforward, and you may well wonder if you actually need insurance. For instance, if you drive someone else’s car. In that case, you may want non-owner auto insurance to offer added protection. 

Everything depends on your state, the insurance company, and the type of policy when it comes to insurance. But in general, here’s how things tend to work in the following situations.

1. You’re not a licensed driver, but you keep a car for someone else to drive.

You can get car insurance for a vehicle that you don’t even drive. 

And why would somebody do that? Maybe you don’t like to drive. For instance, you’re up there in years and feel your driving days are behind you. But your adult and licensed son lives nearby, and you figure he can drive you in your old car to the store sometimes.

“The insurance follows the car, not the driver,” says Loretta Worters, the vice president of media relations at the Insurance Information Institute, a New York City-based industry association that exists to improve public understanding of insurance.

So in that hypothetical — as long as you have a valid driver’s license — the car would probably be covered even if you did drive the car every once in a while, says Worters.

But there’s another reason to consider getting car insurance. One case is if you own a car that you no longer drive but would be financially hurt if something happened to the vehicle. Worters says that you’ll need coverage if, say, your car is parked on the street and another driver hits it or a tree falls on it or floodwaters damage it. 

Still, again, every situation is different. You may not be an aging driver with a car you aren’t driving. Let’s say you have a DUI or a series of them, and you can’t drive now. The court has ordered you not to drive, but you have a car and you’d like to get it insured for other family members to drive. 

That’s understandable, and you may be able to get insurance — but assuming the car is registered in your name, you probably won’t be able to do it cheaply, even if you promise that you won’t drive. If the car is on your property, auto insurers are going to be worried that you’re too close to those car keys and the car is in your driveway.

2. You’re leaving the country for a year and someone else will use your car.

The best thing to do in this instance is to add that person to your insurance policy, Worters says.

Talk to your insurance company. The auto insurance company may allow a relative to add your car to his or her policy. Still, it may not be in your best interest to stop paying car insurance for a year. It sounds nice, and you understandably may not be too excited about paying premiums for car insurance that you aren’t using because you’re working in another country for a year.

But drivers who let insurance policies lapse often find that their rates go up significantly, sometimes as much as 35%, when they start paying again. Now that may be worth it to you since you will save money by not paying insurance for a year, but it’s something to think about.

Still, talk to your insurer. If the insurance company knows what’s going on, it may reduce your rates considerably. Then, you’ll pay normal rates when you come back and drive again.

3. The car is an extra vehicle that no one will drive for months at a time. 

You will probably need to keep liability insurance on the car in this instance.

Some states require your wheels to be insured for the vehicle to be properly registered. In any case, if it’s a car that you eventually will drive, it probably needs to be insured, but as goes our common refrain — talk to your insurance agent.

Here are some examples and what to do:

Your kid is going to college — and won’t be taking the car. 

If your child is going to be at a college 100 or more miles away, your insurer will probably offer some sort of discount. If your kid lives closer, the car insurance company figures the odds of your child coming back and driving more than you might plan will go up.

You’re going to the military and being deployed and won’t need a car for a while. 

Talk to your car insurance company. You may decide you shouldn’t suspend your policy but you’ll probably be able to get a discount.

You have a DUI and won’t be allowed to drive for a while. 

In this case, you’re probably becoming acquainted with things like SR-22 insurance, which isn’t really insurance, but a certificate that proves you’re carrying the minimum amount of car insurance that you need.

Having an SR-22 will let you keep or get back your driving privileges, car or not. SR-22’s are pretty inexpensive — maybe $25 — but if you have an SR-22, your car insurance premiums will likely be very high.

In any of these cases in which you have car insurance without a vehicle, you might want to drop optional types of coverage like collision insurance, which covers damage to your car from crashes. But generally, you want to keep most types of car insurance, like comprehensive insurance, which covers losses from vandalism, natural disasters and theft. That can happen, even if the car is seemingly safely tucked away in your garage.

Ways to reduce car insurance cost

Just as we may miss some of the nuances of car insurance — that you still may need it, for instance, even if you’re living abroad while your car stays at home — it’s easy to go through life being unaware that there are a lot of ways to bring those car premiums down.

If you’re looking for ways to reduce your car insurance cost, here are a few strategies.

Bundle policies

You hear this a lot on TV insurance ads, and it’s true. If you get your car insurance with your homeowners or renters insurance, you can save money on both policies. 

If you have two or three cars or several drivers under one roof, you’re probably going to want them all on the same policy. If you own a car and a motorcycle or a boat, you’d likely want them on one policy. Well, you get the idea.

Take a defensive driving course

It’s a drag, but if you want to save money, this may be the way to go. You’ll want to make sure that the defensive driving course you have in mind is one your insurer approves of, and check to see how much you’ll save, but odds are, you’ll get something like 5% to 10% of your premium shaved off.

Increase your car insurance deductible 

This is a way to reduce your premium, but whether it’s a good idea is up for debate. 

The deductible is the amount of money you pay for repairs before insurance kicks in. If you raise the deductible, your premium will go down. That’s great. We all love lower premiums. But if your car is damaged or stolen and you have a high deductible, you have to pay that amount before your insurance starts paying for the rest.

So really examine this strategy before you go there.

Ask your insurer if there are any discounts available

There’s little downside to this strategy. If you learn that there are no car insurance discounts that you can grab, you’ve just wasted a phone call or some time writing an email. 

But some of the auto discounts that may be out there include a “good student discount.” If your high school or college student is getting at least a B average, you may be able to save anywhere from 6% to 36% off your premiums.

The only bummer is that you need to be organized enough to routinely update your insurer with your kid’s great grades, so you can earn that discount.

You may also get a discount for not driving much. If you work out of home instead of commuting to work, you may want to mention that to your insurer.

Pay your bill upfront

As you probably know, if you pay ahead, like your entire six or 12-month bill, you’ll pay less overall than paying monthly premiums. You might save as much as 5% or 10%. Sure, it may be a tall order paying a half or full year of insurance, but in the long run, you’ll save money.

Drive safely

The best way to save on your car insurance is to drive responsibly. Of course, you can’t help it if some reckless driver comes out of nowhere and sideswipes your car, but many insurance companies will give you discounts, sometimes 10% or higher, the longer you go without a speeding ticket or an accident.

Put a telematics device in your car

People usually refer to telematics as a car tracking device. You simply plug these into your car’s OBD-II port, which is generally found on your steering column, and they will monitor your driving. 

If you brake well and you don’t speed, your insurer will know that, and you’ll see your premiums go down. If you brake hard and drive so fast that the cops have trouble catching up, then, well, getting a telematics device won’t save you any money.

Comparison shop

If it’s been a while since you’ve shopped around, maybe you should — just to see what’s out there. If you find nothing you think is worth switching over to, at least you know you looked and can feel confident that you have an insurer with the best car insurance rates.