As I explained in a previous post about personal umbrella policies, our society becomes increasingly litigious during tough economic times. Another byproduct we see of high gas prices, high unemployment, and the general trend of people leaving rural areas for urban areas is that more and more people are choosing to go car-less.  Maybe you use a bike, public transportation, occasionally drive a friend’s car, or walk. It’s great for the environment, and saves you lots of money on car payments and gas! For most people, the thought of needing to maintain an auto insurance policy when they have no automobile would seem counterintuitive, and never cross their minds. 

A special policy called a Non-Owner or Named Operator policy provides you with “portable” liability coverage that follows you as you drive someone else’s vehicle. These policies are extremely inexpensive, as there is no vehicle and the company knows you won’t drive often.

There are several important reasons someone who doesn’t own a car needs to keep an insurance policy:
 
1.    Liability coverage when driving family or friend’s car. Chances are that even though you may not own a car, or cancelled your policy because you aren’t driving your car, you still might occasionally operate a vehicle. Maybe you borrow your parents’ or friend’s car, drive Grandma to the doctor, or end up a designated driver. If you cause an accident and injure or kill someone (or multiple people), a judge will not care whether or not you have insurance to pay for the settlement that the victims or family members will be awarded. Without the liability coverage afforded by a non-owner policy, you will have your wages garnished, assets seized, and even lose your tax returns until you have paid your court ordered restitution. We are talking thousands of dollars, depending on their injuries and vehicle damage.

Even if the other guy has insurance, their company will subrogate against you—take you to court and make you pay them back. Bottom line, if you are at fault, you will pay for it.

2.    Maintain continuous liability coverage to get better rates. When you are ready to insure your own vehicle again, your agent will ask you what your prior liability limits were and if you’ve had any lapse in coverage. Even if you haven’t had a vehicle, insurance companies want to see that you have continuous liability coverages (lapses in coverage indicate a higher likelihood of future claims). If you let your policy lapse, you will experience higher rates on your new policy. 

3.    Avoid an SR-22. If you don’t know what an SR-22 is, that’s a very good thing. Drivers who have had a DUI, drove on a suspended license, or had no insurance at the time of an accident are required to file an SR-22 with the state and pay driver’s responsibility fees. An SR-22 is a state filing that maintains a record that you carry the proper amount of car insurance, which you have to continuously prove, or they will revoke your license.

I quoted a Named Operator policy today, and for $100,000 of liability coverage per person, $300,000 per accident, the rate was $79.50 for 6 months. So for $13 a month (a trip to the movies), you can avoid paying a costly liability claim for years to come, get better rates on your car insurance in the future, and avoid visiting the DMV to maintain your SR-22 and driving privileges.

If you'd like more information or a quote for a Named Operator policy, I'm happy to help! Send me an email or give me a call at 517-319-5113.

Have a question for Emily? Email her at emilyh@lymansheets.com, or follow her on Twitter @AgentEmilyHarte, find her on Facebook, and connect with her on LinkedIn.