So you are finally living the nomadic life. You are living off your investments or working from your laptop. You followed the steps in my post on the essential steps to take before starting full-time travel. The house is sold, or the apartment lease is over. The car is sold too. You are now fully location independent.

No more paying for a car that sits parked most of the year collecting dust. No more maintenance, no more storage lot, and no more borrowing a driveway from a friend or family member. When you are back in the US for a short visit, you just rent a car, which for me is cheaper than owning one all year. I explained why in step 4 of that post.

And best of all, no more car insurance bill. It is tempting to think you are finally free from US car insurance companies for good. Well, you are not 100% free. I don’t think it would be wise to divorce the car insurance industry completely, and I didn’t do it myself. I still pay for one small policy even though I don’t own a car anymore. Wait, what? What are you talking about? Well, keep reading to see why!

Why I Kept a Non-Owner Policy

A non-owner policy is car insurance for someone who drives but does not own a car. It follows me, not a vehicle. It is liability coverage, so it is there for the injuries and damage I cause to other people if an accident is my fault.

I kept it for three reasons.

1. Every time I visit the US, I rent a car. To drive that car, I need liability coverage, which pays for the damage or injuries I cause to other people in an accident. Without a policy of my own, I would have to buy that coverage from the rental car company, and they charge for it by the day. Over a visit of two or three weeks, that adds up quickly. My non-owner policy already gives me liability coverage, so I do not have to buy it from the rental car company.
2. It also covers me when I drive a friend’s or family member’s car. My non-owner policy gives me my own liability coverage in that situation, so I am not depending only on whatever insurance the owner has. If the owner’s insurance pays first and it is not enough, my policy covers the rest. And if the owner’s insurance does not cover me at all, which can happen when a policy only covers the drivers listed on it, I still have my own liability coverage to fall back on.
3. And then there is the reason most people overlook. It keeps my insurance history active. Insurers like to see continuous coverage. If I go years with no car insurance and then buy a car again one day, I could be looking at higher rates. A non-owner policy is a simple, low cost way to avoid that gap.

Where I Would Look for a Non-Owner Policy

If you are a veteran, or you have a spouse or parent who served in the military, USAA is worth checking for a non-owner policy. If you do not qualify for USAA, Geico is an alternative. In my experience, this is usually not something you can set up through the website. You call and ask specifically for a non-owner liability policy. I pay around $25 per month for mine, which gets me coverage I am comfortable with. Surprisingly, the price keeps going down every time I renew. Yours may be higher or lower depending on your age, your driving history, your ZIP code, and other factors.

What the Non-Owner Policy Does Not Cover

It does not do everything, though. It does not cover the rental car itself. It pays for damage I cause to other people and their property, not for the car I am driving. If I scrape the rental against a pole, or it gets stolen from a parking lot, the non-owner policy does nothing for that bill.

It also does not follow me overseas, and overseas is where I spend most of my year.

The rental company will try to sell me its own coverage to protect its car. It is called a collision damage waiver, and they offer it on the website when I book and again at the counter when I pick up the car. I always reject it. It is priced per day, and I do not need it, because the credit card I pay with already covers the car. The credit card coverage is the part people ask me about the most, so I will go through it as questions and answers.

If I Decline the Rental Company’s Collision Damage Waiver, What Covers the Rental Car?

The credit card I pay with. I have two cards that come with this coverage, my American Express Platinum and my Chase Sapphire Preferred. Each one covers damage to a rental car or theft of it, but only on a rental I pay for with that card. So I pick one card (more on that later), pay for the whole rental with it, and decline the collision damage waiver that the rental company offers. I am not going to pay the rental company a daily fee for something my card already gives me.

Keep in mind this is only about the rental car. Neither card covers liability. If I hit another car, the card is not paying for the other driver’s car or injuries. That is what my non-owner policy is for. My credit card cover the rental car, and my non-owner policy covers the damage I cause to other people, so I need the two together.

Which Card Do I Use?

The American Express Platinum. I only earn 1 point per dollar on rental cars with it, and I could earn more points by using a different card. I use it anyway, because I have found American Express to be more reliable when it comes to rental car insurance claims. That peace of mind is worth more to me than the extra points.

But the American Express Coverage Is Secondary. Does That Bother Me?

No, because I do not own a car. Secondary coverage pays after any other insurance that covers the same damage. Primary coverage pays first. The rental car coverage on the Sapphire Preferred is primary, and the coverage on the American Express Platinum is secondary.

That difference matters if you own a car and your own car insurance covers damage to it. With secondary coverage, a claim for damage to a rental car has to go through your own car insurance first. In that case, a card with primary coverage, like the Sapphire Preferred, may be the better one to put your rentals on.

I do not have that problem. The only car insurance I have is my non-owner policy, and it is liability only. It does not cover damage to the car I am driving. That means I have no other insurance that would pay for damage to the rental car before the American Express coverage does. So the American Express coverage usually ends up paying first, even though it is called secondary.

What if the Rental Company Does Not Accept American Express?

It happens, especially overseas. When it does, I use my Chase Sapphire Preferred instead. It is a Visa, so it is accepted almost everywhere, and it comes with its own rental car coverage. That coverage is primary, so I am not giving anything up by switching cards. Everything else stays the same. I pay for the whole rental with that card, and I decline the collision damage waiver. Before I rent, I check the latest guide to benefits and call Chase to make sure the country is covered, the same way I do with American Express.

How Do I Know I Am Covered Before I Rent?

I do not try to memorize the fine print, and I do not trust what I remember from last year. Card benefits change more often than most people realize. So before I rent, I always go check the latest guide to benefits for the card. I usually call the number on the back of the card too, to make sure the country I am renting in is covered, because some countries are excluded. And while I have them on the phone, I usually request a letter of coverage so I have it in writing.

What About Liability When I Rent Overseas?

My non-owner policy does not follow me overseas. I have rented cars in Iceland, Portugal, the Faroe Islands, and many other countries. In most of them, basic third party liability was already built into the rental rate, because it is the law there. When it is not included, or when I cannot tell from the rental agreement, I sort it out before I drive off rather than assume I am covered.

What if I Need a Car for More Than a Month?

The card coverage is limited to about 30 days per rental, so it is not meant for long rentals. That is rarely a problem for me, because I do not usually rent for that long.

When I need a car for a longer stretch, I usually use Turo, an app where you rent a car directly from its owner, instead of a rental company. I have only done this in the US. The rental car coverage that comes with my credit cards does not work with Turo, so I do not count on my cards there. Turo has its own coverage, and I usually pay extra for a better plan from them to cover the car.

My non-owner policy matters here too. My liability coverage follows me as the driver, so in general it applies to any car I drive in the US, not only cars from a rental company. In most states, Turo’s liability coverage only comes in after any personal insurance I have, so my non-owner policy may be the first one to pay if I cause an accident. The one thing to check is that insurers classify Turo as car sharing, which means renting a car from a private owner through an app, and some insurers do not cover it. It is worth asking yours how your non-owner policy treats Turo.

How It All Fits Together

So this is my whole setup.

• When I rent in the US, I decline the rental company’s collision damage waiver. My non-owner policy handles liability and my American Express Platinum handles the rental car. If the rental company does not accept American Express, I use my Chase Sapphire Preferred instead.
• When I rent overseas, I also decline the collision damage waiver. Liability is included in the rental rate by law in most countries, but I still check before I drive off. My American Express Platinum handles the rental car once I confirm the country is covered, and my Chase Sapphire Preferred is my backup there too in case they don’t accept American Express.
• When I need a car for a longer stretch in the US, I use Turo. I pay extra for a better Turo plan to cover the car. For liability, I have my non-owner policy first, and the liability coverage that comes with every Turo trip as a backup.

Selling the car freed me from the big insurance bill that comes with owning a car, along with the maintenance and the storage. It did not free me from needing coverage when I get behind the wheel. The strategy above costs me less than keeping a car that sits parked most of the year.

I also talked about this in my credit cards post, in case you are curious about my overall credit card strategy. And if you want to see which card I use for each type of purchase in this nomadic lifestyle, I built a credit card selection tool for that.