Short-term car insurance seems like a great idea, but what are you really getting?
Many websites throw around the terms “short-term” or “temporary” car insurance without mentioning which insurers actually provide it or where to buy it. That’s because these policies do not exist — and in some cases, are scams. If you want a temporary car insurance policy, you'll need to cancel your six- or 12-month policy mid-term.
Let’s review the primary reasons temporary car insurance does not exist, and why you should avoid these policies.
Most insurance companies offer two options for policy term lengths: six months and — less commonly — 12 months. An insurance company wants to keep its clients for as long as possible. Drivers who only want to carry insurance for a short period of time aren't likely to renew, which make them less-than-ideal customers. Plus, the premium an insurance company collects from an extremely short-term car insurance policy isn't worth the insurer's administrative costs.
Drivers seeking short-term car insurance policies also present unique risks. Car insurance companies are wary of temporary policies, as they can act as cover for drivers simply looking for a claim payout or practicing insurance fraud, i.e., a high-risk client.
For more information on common car insurance policy term lengths, see our articles below:
While it varies by company, most policies require a down payment worth 30 to 45 days of the total premium. If you cancel five days into your policy period, you’re not always guaranteed to recoup your entire down payment.
Some insurance companies also assess cancellation fees.
Most companies have a grace period rule for car insurance coverage. Many insurance companies limit the use of collision and comprehensive coverage within 30 days of a policy's inception. If you only want an insurance policy for two weeks, you could be ineligible for major coverage types during this window.
Unless you live in New Hampshire, you're required by law to carry at least the legal liability coverage limit to operate or register a vehicle. If you’re caught driving without insurance, your license can be suspended.
If you’re leasing or financing a vehicle, your lender will usually require you to carry state-minimum coverage, as well as comprehensive and collision — and certainly not in a short-term capacity. If your lender discovers you’re driving without insurance, you may risk getting your vehicle repossessed.
Many insurance companies will ask you if you’ve had six months of prior continuous coverage before agreeing to take you on as a client. The reason for this has to do with the risk level of a previously uninsured client. If you had an active license but were not insured, an insurance company will assume you were driving without insurance, which is an indicator of a high-risk client. Having gaps in your insurance history can raise your premium by nearly $90 per six-month policy.
Number of months with prior insurer
Average 6-month premium
This is the primary risk of driving without insurance. If you're found at-fault in a collision but you don't have insurance, you may be ticketed, have your license suspended, and potentially be sued for the property or bodily injury damages you cause. If you’re the victim of a hit-and-run accident, you won’t have any coverage. Any property damage to your vehicle would be paid out-of-pocket.
The idea of temporary car insurance is appealing, as it offers protection when you need it and saves you money when you don't need coverage. However, it’s uncommon for insurance companies to offer policy terms shorter than six months. If you want car insurance on a temporary basis — which we don’t recommend — you can purchase an insurance policy before canceling mid-term. This practice can land you in a lot of trouble for the reasons outlined previously.
An option worth considering is usage-based car insurance. This classification of insurance prices premiums based on driving history. If you drive infrequently or drive safely, you can get a considerable discount from your insurer. Below are telematics programs offered by popular car insurance companies.
Average of $130
Average of 10-25%
Up to 15%
Up to 40%
Average of 5-30%
One great way to maintain car insurance affordably is to look into anon-owner policy. Non-owner car insurance allows you to have continuous coverage without even having to own a vehicle. Because dropping coverage can lead to higher rates once you need insurance again, non-owner policies are a much better option than going without insurance.
Non-owner policies can also be a great option for those required to carry an SR-22. With non-owners policies, you can attach an SR-22 even if you do not own a vehicle, ensuring that you meet your legal requirements.
This depends on whether or not you are driving full time while you are at school. If you are, you needyour own policy at that address. However, if you are not driving while at school, and wish to remain on a parent’s policy while back at home, you can remain on that policy. Furthermore, your parents could be eligible for a “student away from home” discount on their policy if you are only driving on breaks from school.
In most cases, borrowing a car from a friend or family member qualifies as permissive use. Permissive use extends your car insurance coverage to those who use a vehicle on an occasional basis—usually no more than once a month or twelve times a year.
If you carry comprehensive and collision coverage, many car insurance companies will extend this coverage to your rental car, though you may still be on the line for the deductible. As each company may have a different policy on this, you would need to verify this with your insurer beforehand.
Some rental car companies also offer rental insurance. The portion that covers damage to the rental vehicle is commonly known as a loss damage—or collision damage—waiver. Supplementary liability covers damage to others that you might cause. Some credit cards also provide coverage, as do a number of companies such as Bonzah and Rental Cover.
If you are heading out on a road trip, your standard car insurance coverage would apply from one state to another. Even if you only carry the bare minimum of liability coverage, your limits are automatically raised to meet those of the state you are currently in. For instance, if you travel from a state like California with lower limits (15/30/5) to Nevada with higher limits (25/50/20), your limits are automatically raised to Nevada’s at no extra cost to you. Your limits will never decrease, meaning that you will always have at least the minimum liability protection required by your state.
Bear in mind that if you are traveling in an RV, you will need to seek out an RV insurance policy.
If you’re looking for more information, see our related articles: