What is non-owner auto insurance and when do you need it?

If you don't own a car but frequently borrow or rent one, then non-owner car insurance could save you money.

A non-owner car insurance policy may be cheaper than paying for a car rental company's liability insurance. And when you're ready to become a car owner, this type of coverage could help you qualify for a continuous coverage discount on a standard auto insurance policy.

If you're considering non-owner car insurance, CNBC Select shares how it works and when it makes sense to have it.

Non-owner car insurance is a type of coverage for licensed drivers who don't own a car. It typically only covers liability for the policyholder. So a non-owners policy won't protect the vehicle you're driving but will pay for damages and injuries you cause to others.

This type of insurance may only cover the policyholder. If that's the case, your spouse or partner will need their own policy. This coverage is also typically classified as secondary, which means it covers expenses not paid by the vehicle owner's primary car insurance. And with non-owner car insurance, there is no deductible to meet before the coverage kicks in.

Just like with any insurance, you'll want to shop around to find the best deal. Non-owner insurance isn't offered by every provider in every state they operate, but many of the top companies offer it including Geico, Nationwide and The General. Nationwide is available in 46 states plus Washington D.C., so it's a great place to start when comparing policies.

Geico offers non-owner auto insurance and is CNBC Select's best overall car insurance provider and consistently has high customer satisfaction ratings from J.D. Power and the Better Business Bureau (BBB).

When you are at fault for injuries or damages while driving a borrower or renter vehicle, non-owner auto insurance protects you. It covers the costs for:

• Repairing or replacing damaged property
• Medical bills for injuries you've caused
• Legal fees if you are sued because of a covered accident

Depending on the coverage you have and where you live, a non-owners auto policy could include additional coverage. Some policies cover your medical bills and may also provide underinsured motorist coverage (which helps pay for when another driver is at fault but doesn't have enough liability coverage to settle all of the costs).

Non-owner auto insurance typically only includes liability coverage, which means it won't cover:

• Damage to the vehicle you're driving: This could be covered by the vehicle owner's insurance or another driver's insurance if they are at fault.
• Personal property: Any damage or theft to your belongings in a car you're driving won't be covered, but if you have renters insurance or a homeowners policy, that coverage may apply.
• Business activity: Business-related driving isn't covered by a personal non-owners auto insurance policy, but non-owners car insurance is available for businesses.

If you don't own a car, that doesn't automatically mean you need non-owner car insurance. But there are situations where it can save you money.

If you plan on purchasing a car soon or are in between cars, a non-owners auto policy could help you secure what's known as a continuous coverage discount. Many auto insurance providers offer discounts if you've had auto coverage for a certain amount of time, typically six months or more. However, you'll want to crunch the numbers to see if the discount is large enough to justify paying for non-owners car insurance.

Anyone who frequently rents cars or uses car-sharing services, such as Zipcar or Turo, may benefit from this type of coverage. Having a non-owners car insurance policy allows you to skip paying for a rental company's liability coverage, which can easily cost $10-$15 per day on top of all the other rental fees. But again, you'll want to do the math to make sure the savings outweigh the cost.

Yes, you can get a non-owner car insurance policy from most auto insurance providers. This type of insurance typically only provides liability coverage.

Non-owner car insurance coverage makes sense if you frequently rent or borrow vehicles and you don't own a car. You'll just want to ensure that the premiums are less than what you'd pay if you pay for a rental company's liability insurance.

A non-owner auto insurance policy doesn't provide comprehensive or collision coverage for a rental car. But it does offer liability coverage when you're driving a rental and covers damages or injuries you cause to others while driving.

Non-owner car insurance is available to drivers who don't own a car. It provides liability coverage when you're borrowing or renting a car. This type of coverage can make sense depending on how frequently you rent cars because it could end up being cheaper than paying for the rental company's liability insurance.

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