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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 “short-term” or “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 the reasons to avoid these policies.
Most insurance companies offer two options for 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, you can be ticketed and 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 after an accident without insurance, you will most likely 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 and usage-based programs offered by popular car insurance companies.
Average of $130
Average of 10-25%
State Farm Drive Safe & Save
Up to 15%
Up to 40%
Liberty Mutual RightTrack
Average of 5-30%