When was the last time you thought about the personal lines version of non-owner auto insurance, also known as named non-owned auto? It’s probably been a while. Non-owner auto is finding a new home within a growing market of consumers who break the mold of a traditional insurance customer. In this article, we make the case for why Independent Agency Owners should take a closer look at non-owner auto insurance
What you’ll learn:
- What non-owner auto insurance covers
- The common misconceptions about non-owner auto insurance
- The modern profile of a non-owner auto customer
- Why they buy
- What you can do as an Independent Agency Owner
What Non-owner Auto Insurance Covers
You may think of non-owner auto (NOA) as proof of financial responsibility, or what to suggest when your Beacon Hill client takes their Ferrari off the road for the winter, but this same product is also for students and young professionals who rent, share, and borrow. Plus, it provides liability well above minimum limits with UM/UIM included. Simply stated, a NOA policy is just an endorsed owned-auto policy without collision and comprehensive coverages because there’s no registered vehicle.
Top 3 Misconceptions of Non-owner Auto Insurance
When we ask Agency Owners for their opinions of non-owner auto (NOA) insurance, we hear many common themes. We know these beliefs were true for decades, but consumer behaviors are changing. So, before you read further, it’s worth asking yourself: Why isn’t non-owner auto insurance in my agency product toolkit?
Myth #1: NOA is a product that attracts bad drivers
In our experience, there are two markets for NOA with very different risk profiles. In one market are the higher-risk drivers – these are the SR-22 and suspended vehicle drivers that NOA has traditionally served. In the other market are the lower-risk drivers – these are people who rent or borrow cars with a clean driving record and are oftentimes overlooked as a sales opportunity.
Myth #2: Selling NOA is too much work for not enough premium (and commission)
Insurance carriers offer NOA as an accommodation when owned-auto insurance is cancelled. Therefore, little investment has gone into modernizing pricing and quoting of NOA. Who wants to sell a $350 policy for 10%/10% that takes 30 minutes to quote? Certainly not us. There’s good news – you now have options to quote NOA in minutes on modern systems or refer these leads to someone else while getting paid a commission that’s worth your time.
Myth #3: There aren’t enough NOA sales opportunities compared to Auto and Home policies
When you believe NOA is low quality and too much work to quote, this statement is absolutely true. But when you think about the children of your clients – Millennials and Gen Z – and their lifestyle choices, does the number of opportunities begin to increase? You bet they do. There are 300,000 people between 19 and 34-years old living in Massachusetts without a car of their own. NOA is the bridge product to those auto and home policies that you eventually want to sell.
The New Non-Owner Auto Consumer
Now that you have a picture of the market opportunity. Who exactly are these consumers? In our experience, we’ve uncovered three life stages and moments to sell a non-owner auto policy:
- The 18 to 22-year-old college student attending school without a car
- The 22 to 24-year-old kicked off a parent’s auto policy
- The 25 to 35-year-old living in a city and frequently renting cars
In each stage, non-owner auto insurance may be the first voluntary, or non-compulsory, insurance product that this person has ever purchased. It’s also the perfect opportunity to set up your agency for a lifetime relationship to upsell or cross-sell other products.
Why Buy a Non-owner Auto Policy
We all know the adage, “Insurance is sold, not bought.” Selling the value of a non-owner auto policy is getting much easier as these prospects or their parents understand the benefits after they discover the product.
Why a Parent (Your Client) Buys:
You want your child to maintain continuous insurance
Nearly every insurer raises rates for drivers that have had a “lapse in coverage.” Even if you never operated a vehicle during your time without insurance, you will be considered a higher risk, and will not qualify for the best rates. If you’re car-free in the near term but eventually plan to buy a car, a non-owner insurance policy is an inexpensive way to maintain continuous coverage.
You value convenience
Nobody wants to think about auto insurance every time they sit behind the wheel of a rented or borrowed car. Having an annual policy eliminates the hassle of making an insurance decision every time you drive.
You value peace of mind
Parents worry about bad things happening to their kids – getting doored while biking in the city, getting into an accident while using a shady car-sharing service, borrowing a roommate’s car who didn’t pay their auto insurance bill. Non-owner auto can help make some of these worries go away.
Why a 20 or 30-Something Consumer Buys:
You frequently rent cars and want to save money
Buying liability insurance at the car rental counter often costs $18-25 /day. So, if you rent cars more than a few times a year, a non-owner auto policy can actually save you money. A credit card with rental car insurance covers damage to the car (Collision Damage Waiver) but provides no liability protection. Combining the credit card insurance with non-owner auto provides the best coverage.
You frequently use car-sharing services
Car-sharing companies like Zipcar, Turo, and Getaround are growing in popularity in cities and on college campuses, but those services only provide the minimum level of state-mandated liability coverage. With a non-owner insurance policy, you can increase the liability limits and add the convenience of always-on coverage in any vehicle.
You borrow cars from friends or family members you don’t live with
When you drive someone else’s car with permission, the claims from an accident will generally be covered under the owner’s insurance policy. But do you really want to depend on your friend or family member to have adequate insurance and pay their bills? By getting your own NOA policy, you can be more certain of your coverage should you get into an accident.
What you can do as an Independent Agency
Convinced there’s an opportunity for your agency?
If you’re interested in learning more about our Non-Owned Auto Insurance Program Options, please visit our Agent NOA Program page or email me at jay (at) surroundins.com
At Surround Insurance, we’re giving Independent Agents the digital tools and innovative new products they need to compete in a changing world.
