Temporary and Short-Term Car Insurance Coverage Explained
Too many insurance companies toss around the term “short-term” or “temporary” car insurance but rarely explain it.
Even those who make an effort to explain leave out key details, because they don’t offer true temporary coverage.
Temporary coverage is hard to find, but not impossible. By knowing what this essential coverage is, how it works, and where to find it, you can escape the trap of insurance sites trying to funnel you back into their long-term policies.
What is Temporary or Short-Term Car Insurance?
Short-term and temporary coverage protects your vehicle from damage, theft, and injuries in your car, a borrowed car, or a rental car.
A typical car insurance policy lasts six months to one year for coverage, but temporary insurance removes these time constraints and allows you to unlock from a long-term coverage period.
In temporary coverage policies, you specify the dates you want coverage, and that is how long you are covered for. Yes, you can extend it if necessary, but it is meant to bridge the gap while you travel, wait for a new car purchase, or while you borrow a vehicle short-term.
You do not want to stay on a temporary plan for longer than necessary, or you will end up paying more than you would for traditional coverage. Furthermore, most insurers have maximum limits on their short-term policies; therefore, you may be restricted to a few weeks or months depending on the company.
When Do You Need This Coverage?
Most of the time, you rely on your ordinary insurance policy, which you renew bi-annually or annually.
So, when would you need to utilize short-term or temporary coverage?
Some situations that might warrant using short-term and temporary coverage include:
- Renting a Car: You are renting a vehicle for an extended period (such as more than 72 hours), but you do not want to overpay for coverage by using the rental car company’s included insurance plans.
- Borrowing a Friend’s Car: When you drive a friend’s car regularly, it becomes a gray area for insurance coverage. To avoid unnecessary gaps in coverage, you may want a short-term policy to cover you while you drive their car.
- Traveling: If you are a non-US citizen are traveling to America for the short-term or the long-term and you plan on driving while you are here, you will need to buy auto insurance coverage for the duration of your visit.
- Purchasing a New Vehicle: Usually when you purchase a new vehicle, the dealership requires you to have coverage before you drive the car off the lot. Often times, you can just call up your insurance company and get instant proof of coverage for your new policy. Other times, the insurer might issue you an insurance binder, which is temporary coverage while your new policy is being written.
- Purchasing a Car for Resale: Perhaps you are in the business of buying cars, fixing them up and selling them. Alternatively, you are purchasing a car to use for a few weeks while waiting on another vehicle. In this case, you could benefit from short-term coverage, because you will not have the car long enough to justify a regular policy.
- Participating in a Ride Share Program: You might want additional coverage while doing a rideshare, especially if you are driving, but do not own the vehicle.
Situations Where You Can Avoid Short-Term Coverage
Not all short-term circumstances require short-term coverage. Some examples would include:
- Renting a Car for a Short Period: You might be renting a car for 24 hours or over the weekend. In this case, you might opt for the coverage through the rental car company rather than hassle with setting up a policy for a few days.
- Using a Credit Card for Your Rental: Some credit cards offer extended coverage for rental cars. Therefore, talk to your credit card company and see how long you can insure a vehicle, the level of coverage, and any limitations.
- You Borrowed a Friend’s Car Irregularly: If you borrow a friend’s car once a week or rarely, then their policy should be enough to cover any incidents. However, if the insurance company classifies your use as “regular,” the policy would not cover you in an accident. Be cautious about trying to skirt the line on this type of coverage, and have a friend call their insurance company to find out what they consider “regular” use.
How Can I Find Temporary Car Insurance Coverage?
Finding an insurance company that offers short-term coverage is hard because most have a minimum of six months required.
Ideally, you should get quotes from at least three insurance companies because the rates for short-term coverage can vary depending on what you are driving, how long, and the area where you are driving.
You might find that your last insurer will still cover you for a short-term policy too, so do not leave them out of the companies you call for quotes.
Tips for Getting a Better Deal on Your Short-Term Coverage
While shopping for coverage, you have a few ways you could save on your premium, including:
- Consider a Non-Owner’s Policy: If you are going to drive multiple vehicles that you do not own, you can buy a non-owner’s policy. This is ideal when you swap cars frequently and have no intention of purchasing your vehicle. These policies transfer with you and cover you regardless of the car you are driving. While you have flexibility regarding the car you drive, you also have limited coverage. You will not have comprehensive coverage.
- Ask Your Existing Insurer for a Deal: If you are traveling, then the first place to look would be your current auto insurance company. They may offer temporary or short-term coverage for rental vehicles. For example, you are parking your existing car at home and traveling to another state for a few weeks on business. Your auto insurance company may have rental car coverage or short-term options that protect you (at a discount) during your trip.
- Look into Usage-Based Insurance Too: If you do not drive much to justify a full policy, then usage-based insurance is an option. The coverage is the same, but you pay by the mile rather than what statistics say everyone else drives.
- Avoid Gaps: Temporary coverage is excellent, but if you cancel your existing policy too early, you will find that rates go up dramatically for periods without coverage.
Temporary and short-term insurance have their uses. Before you buy, look at other options and make sure you do not have more affordable ways to cover yourself first. Then, shop around, look for deals, and pick up a policy that suits your travel or trip needs.