Do You Need Car Insurance in Extenuating Circumstances?

Here’s why you should never drive without proper car insurance coverage

Teenage girl in drivers seat talks to driving instructor in car.

Thomas Barwick / Getty Images

You might consider dropping some or all car insurance coverages in several situations. Perhaps you're heading out for a months-long vacation. Maybe you’ve sold your car and don’t plan to buy another one soon, or perhaps you’re heading off to college and leaving your ride at home.

Sometimes it makes sense to cancel some or all car insurance coverages. However, state laws require all drivers to carry minimum levels of coverage. And if you get into an accident and don’t have the coverages you need, it might have a serious impact on your finances.

Here's what you need to know about having car insurance in different extenuating circumstances.

When You Get Your Permit and Driver’s License

First-time drivers often get a learner’s permit before their driver's license. If your child is getting a learner’s permit, contact your insurance agent to find out if your coverage will transfer to the new driver. Also find out if your policy will cover a driver with a learner’s permit if they drive across state lines.

Insurance company guidelines and state laws vary, and in some cases, the young driver may need a separate policy. If a child’s name is on the title of a vehicle, they typically need their own policy. But if the child still lives at home and drives a parent’s automobile, a parent can add the child to their policy.


State laws require all drivers to carry minimum levels of bodily injury liability and property damage liability coverages, and some states also require other coverages such as uninsured and underinsured motorist coverages. If your child uses a family car to take a driving test to obtain a driver’s license, the agency will likely require them to show proof of vehicle registration and insurance.

When You Don't Own a Car or Can No Longer Drive

“If you’re not driving, you don’t need auto insurance,” Jake Mathenia, an auto service specialist with Steve Womack’s State Farm Insurance Agency in Memphis, Tennessee, told The Balance in a phone interview.

However, check with your health insurance company to find out if your policy covers injuries sustained in an automobile accident.

If you occasionally borrow a vehicle from a friend or family member who lives in your household, their insurance company may allow them to list you as a driver. If available in your state, you can also purchase a non-owner car insurance policy. A non-owner policy follows a named person, not a specific automobile, so it provides protection regardless of whose car you borrow.

Typically, non-owner auto insurance policies only offer bodily injury liability and property damage liability coverages, with no deductible, but some insurers also offer additional coverages. Non-owner policies offer secondary coverage. If you’re at fault for an accident, the vehicle owner’s policy would pay first. If liability costs exceed the owner’s policy limits, then your non-owner policy would kick in.


If you sell a car and plan to get another one in the future, switching to a non-owner policy can help you avoid a lapse in coverage.

When You're Leasing a Car

A leased vehicle belongs to the leasing company, not the lessee. Usually, lessors require you to carry collision and comprehensive coverages.

“You’re essentially renting a car,” Mathenia said of leasing. “They want to be sure that if something happens, the car will be restored, or have enough coverage that if the car is totaled, a policy will pay for it.”

A leasing company may also require you to carry more liability coverage than required by law. Typical requirements can, for example, include a minimum of $100,000 in bodily injury coverage per person, $300,000 in bodily injury coverage per accident, and $50,000 in property damage liability coverage.

When leasing a vehicle, also consider buying gap insurance. If you total a leased car, your collision coverage may only pay actual cash value, which may not always cover the remaining costs of the lease. But if you carry gap insurance, it will cover the difference.


Some car leasing companies include gap insurance in the lease amount. In some cases, auto dealerships and leasing companies sell gap insurance, but you can usually get a better deal when buying a policy through an insurance company.

When You're Driving Someone Else’s Car

A standard car insurance policy covers a specific automobile. So in most cases, the owner’s auto policy will protect the vehicle if you drive it with permission. For example, you might drive a family member’s car while visiting from out of town, borrow a friend’s vehicle while yours is in the shop, or drive a friend’s car while traveling together.

If you often borrow a car from someone in your household, they can probably list you as a driver on their car insurance policy. Households often include spouses and children, but they may also include roommates who share the same address.

Remember, insurance company guidelines and state insurance codes vary. Always get permission before driving another person’s vehicle, and if you borrow a car often, purchase a non-owner policy for added protection.


If you borrow someone’s car without permission and get into an accident, the owner’s insurance might not cover damages or injuries.

When Your Car Breaks Down

If your car is in the shop for extensive repairs, you might consider temporarily suspending coverage. In such cases, you don’t need to continue paying for collision coverage while your vehicle is not on the road.

Consider pausing comprehensive coverage only if the repair shop has adequate insurance.

“Typically, body shops carry an umbrella policy, so if anything happens to your automobile while it’s in their possession, they’ll have to pay for it,” Mathenia said.

In some states, you must submit an affidavit of non-use to the state to pause auto insurance coverage. If you finance or lease an automobile, you’ll need to get permission from the lienholder or lessor before pausing coverage.

Avoid discontinuing coverage altogether. A gap in coverage, even for a few weeks, may result in higher rates when you buy another policy.

When You’re Away From Home

Deployed military members can often suspend auto insurance coverage. However, before suspending coverage, get permission from your lessor or lienholder, and ask your insurance agent if it will impact your rate when you reinstate coverage.

Some insurers offer discounts for students who leave their car at home when they go off to college. Such programs often have age and distance restrictions, but continue to provide protection when the student occasionally drives the vehicle when they return home, such as during holidays and school breaks.


Some providers require college students who drive a parent or guardian’s automobile to remain as a listed driver on their parent’s policy, even if they only drive the car when they return home for short periods. To remain on a parent’s policy, the student must share their permanent address, even if they temporarily live on campus.

When You Can’t Afford Insurance

If you can no longer afford your car insurance coverage, first speak with your agent to find out if the company offers low-income plans. An agent can help you decide if you can discontinue some coverages, lower coverage limits, or raise your deductibles to decrease your rate.

To prevent uninsured drivers, some states have implemented programs for low-income individuals. For instance, California’s Low Cost Auto Insurance Program helps income-eligible drivers purchase affordable liability coverages. The Minnesota Automobile Insurance Plan helps low-income automobile owners obtain insurance when they can’t find affordable coverage, and requires all insurance companies that write car insurance policies in Minnesota to participate in the program.

Regardless of their income, state laws require all motorists to carry minimum levels of auto insurance.

Frequently Asked Questions (FAQs)

If my car is paid off, what kind of insurance do I need?

Once you pay off your car loan, you might consider dropping collision coverage, comprehensive coverage, or both. Before discontinuing coverage, decide whether you can afford to buy another vehicle out of pocket if you total your vehicle or if it’s stolen.

If your car’s market value is less than your collision and comprehensive deductibles, it makes sense to discontinue those coverages. However, you must continue to carry all state-mandated insurance coverages.

Do I need extra insurance when renting a car?

Before renting a car, ask your insurance agent if your personal auto policy coverage extends to a rental vehicle. If your policy includes collision, comprehensive, liability, and medical payments coverages, you might not need to buy rental car insurance coverage. But if you are traveling for business, your personal auto policy likely won’t extend to a rental car. Also consider purchasing rental car coverage if your policy has high deductibles for collision and comprehensive coverages, or when you’re traveling to another state that has required coverages your policy lacks.

What happens if someone else is driving my car and gets in an accident?

Typically, an auto insurance policy follows the vehicle. So if you give someone permission to drive your automobile and they have an accident, your policy should cover losses, depending on your coverage. If members of your household regularly drive your car, list them on your policy. State laws and insurer guidelines vary, so before lending your car to someone, ask your insurance agent if your policy’s coverages transfer to another driver.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Commonwealth of Pennsylvania. “Applying for a Learner's Permit.”

  2. Florida Department of Highway Safety and Motor Vehicles. “Licensing Requirements for Teens, Graduated Driver License Laws and Driving Curfews.”

  3. Missouri Department of Social Services. “Non-Owner Insurance Policy.”

  4. Progressive. “Lease Insurance: What You Need To Know.”

  5. California Department of Insurance. “California's Low Cost Auto Insurance Program.”

  6. Minnesota Department of Commerce. "Insurance and Financial Assistance."

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