What is Temporary Car Insurance and Should I Get It?

What is Temporary Car Insurance and Should I Get It?

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Reputable insurers generally don't offer temporary car insurance. You can only buy an auto insurance policy in six-month or one-year increments, though many insurers offer payment plans that allow policyholders to pay month to month.

If you see advertisements for short-term or temporary car insurance policies, think twice before purchasing one. Companies marketing one-day, one-week or one-month car insurance may not offer the best coverage suited to your needs.

Drivers with temporary insurance needs should modify the coverage on their existing policy or consider other options, such as rental car insurance or nonowner auto insurance.

We'll explain how to handle your short-term auto insurance needs, including how to buy car insurance to cover temporary scenarios and when you should do so.

What is temporary auto insurance?

Insurers don't typically sell temporary or short-term car insurance for less than six months at a time. Websites may lure you in with promises of seven-day, 14-day or 30-day temporary auto insurance plans, or even short-term car insurance that only lasts for a few hours or a weekend. Submitting your information for a quote online or calling their telephone number, however, will likely route you to a regular licensed agent, who can only offer six-month policies at a minimum.

The shortest you will get from major reputable insurance companies is likely a six-month policy that you would have to cancel part way through, should you want coverage for less than the six-month period.

Even if you only need car insurance for the short term — one month or two months, for instance — you must get a policy for six months. If you already hold an insurance policy for a car you own, ask your insurer if they can adjust your coverages for a temporary situation. If you do not own a car but still need insurance, a nonowner insurance policy or rental car insurance may be the best fit for your short-term situation.

How to get car insurance for temporary situations

Car insurance is sold in six-month or one-year units, which means you cannot buy it on a monthly basis. You must agree to purchase six months of car insurance, which you can then pay for on a month-to-month basis or prepay the full amount and request a refund.

Either way, set up a reminder so you don't forget to cancel your policy before it expires. If you've paid in full upfront, be sure to request a refund. Obtain a cancellation confirmation number and note the time, date and representative you spoke with.

Car insurance companies typically don't charge cancellation fees and will often refund any unearned monthly premiums. And if you cancel coverage after six weeks, for example, but you've only paid for four weeks, the insurer will send you a balance due for the two extra weeks. Watch your bank statement closely, however: Payments can be processed despite cancellation, and refunds can take some time.

To get cheap car insurance for a temporary scenario, you should do exactly what you would do normally: Check with at least three companies to make sure you're getting a good auto insurance quote. Ensure you're comparing the same coverage, limits and duration across insurers.

What short-term situations should you adjust your auto insurance for?

There are a couple of temporary circumstances where it makes sense to adjust your car insurance coverage. Here are some common short-term situations where you should contact your insurer to see if you can adjust your policy:

Temporary coverage for student drivers

If your child attends a college or university and consistently drives a car, they need ongoing car insurance, not temporary coverage. But if they drive only during winter or summer break, you may want to adjust your insurance coverages for a temporary period to reflect those changes.

If you temporarily suspend car insurance coverage for a college-aged driver by taking them off your policy during the semester, you can lower your rates by $1,000 to $2,500 each year, depending on the student's age and driving record. Don't forget to add them back temporarily when they return for winter and summer breaks, however; driving without insurance is illegal and can result in fines or jail time.

Proceed with caution, however: Some insurers require that all members of a household who are licensed or have reached driving age to be listed on a policy, even if the drivers don't use the car frequently or at all.

Other auto insurance companies incentivize policyholders to keep college-aged drivers on the policy by offering discounts. State Farm, for instance, offers the best discounts for college students. These include a good student discount and an away-at-school discount on policies where a university student attends school more than 100 miles from home.

Your insurer may offer comparable discounts. Call your insurance representative, explain your situation and carefully consider your coverage options. Temporary insurance coverage for college students during breaks might seem like an obvious choice, but it may not be the most affordable decision.

If a college-aged student leaves their own car at home during the semester, then lower their coverage to the minimum required by your state and temporarily raise it when they return. This will decrease your rates when the car is not in use.

Temporarily adding someone to your car insurance

Loaning your car to a friend or roommate for a one-time errand? You probably don't need to add this temporary driver to your car insurance. Temporary instances of car sharing are likely covered on your own insurance policy by what's known as a permissive user clause — a policy that protects your car when another driver occasionally uses it.

Have a baby sitter, relative or friend who will regularly drive the car for a short-term period? You'll want to add this person to your car insurance. To temporarily add someone to your car insurance policy, you'll need to call your insurer and share the following information about them:

  • Name
  • Date of birth
  • Gender
  • Social Security number
  • Occupation
  • How long they've had their license
  • Any recent traffic tickets or accidents

When the friend, babysitter or relative in question stops using the car regularly, you can remove them from your policy. Putting someone on your car insurance temporarily will increase your rates, but it's worth it to ensure your car is covered in case this person gets into an accident.

Temporary car insurance for rental cars

Need car insurance for your weekend rental? Buying short-term insurance for a rental car might seem like a good idea, but check with your own insurer before you spring for coverage sold by the rental company. Your own auto insurance policy may provide you with sufficient coverage when driving a rental car, and many credit cards also provide some kind of coverage when you use the card for your rental.

Be aware that your car insurance policy may not cover a car rented for business purposes. If you are on a work trip, you may want to purchase temporary car insurance coverage from the rental company for your business needs.

Short-term international car insurance

Planning to drive down to Mexico or up to Canada? You may need to add some kind of temporary international coverage to your auto insurance. Many major insurers, such as GEICO, Farmers and Progressive, extend your U.S. coverage to Canada but not to Mexico.

Always check with your insurer to make sure you have coverage before driving across international borders. Your car insurance might cover you on a short-term drive through Ontario, but it likely wouldn't apply in Mexico.

Visiting the U.S. from another country? Temporary car insurance is required for all foreigners. If you are a foreign visitor for only a brief period of time, you can purchase temporary car insurance from a rental car company. If you plan to stay longer, you may need to buy a policy from an American insurer.

Placing a car in storage

Temporary coverage might also be a good option if you are planning to put a car in storage for a number of months. Even if you aren't driving the car, it will still be at risk for theft or damage, which the comprehensive portion of the policy could cover. Your state may also require that you maintain insurance on the car, including a minimum level of liability coverage, or else unregister it and surrender your license plates.

Other circumstances

There are a handful of other circumstances where you might wonder if you need a temporary car insurance policy. Here's what you should do when you encounter them:

One-day temporary car insurance for driving test: If you are a permit driver, you should be covered by your parent, spouse or significant other's policy while you're learning the rules of the road. The car you take the test in must be insured, so there should be no need to purchase a separate, temporary policy for just one day.

Temporary car-sharing insurance: Ridesharing insurance is not as straightforward as you might think. Because you are temporarily converting your car into a commercial car, insurers treat it differently than if you were driving your car for personal reasons. Look at your state's laws and insurer's rules to make sure you are covered when driving for ridesharing companies such as Lyft and Uber.

Temporary insurance from car dealerships. You cannot drive a vehicle off a car dealership's lot without demonstrating that it is insured, even if you've already purchased it. (You're covered by the dealer's insurance when you take a car for a test drive.)

If you already have insurance on another car, that insurance may cover you for a brief period of time, up to the limits of your current policy. You don't need to purchase temporary car insurance from a car dealership, even if the dealer offers such insurance.

If you don't already have car insurance in place, shop around for the best rate rather than purchasing insurance from a car dealership. This might take extra time, but it will likely save you money.

Nonowner car insurance

If you typically drive cars that aren't yours, consider getting nonowner car insurance. A nonowner car insurance policy provides both bodily injury and property damage liability coverages, which are mandatory in most states. Since liability coverage follows you, not the car, you'll always be covered — whether the car belongs to a friend, employer or car rental company.

Nonowner car insurance can help cut your costs in the long run. Buying a traditional insurance policy means you're paying for something you don't use every day, and repeatedly buying rental car insurance may ultimately cost more than purchasing a nonowner policy.

Nonowner car insurance is also a good option if you frequently borrow cars from others. But if you live with someone and frequently borrow their car, they should add you to their policy. An insurer could refuse to cover an accident if you are not listed, even if you have a nonowner car insurance policy.

The downside to a nonowner policy? It usually serves as secondary coverage, which means it only kicks in if the primary insurance policy — that held by the car's owner — isn't sufficient to cover damages. And even then, it will only kick in if the coverage on your nonowner's policy exceeds the coverage on the owner's policy.

Imagine, for example, that you are driving a friend's car that has property damage liability limits of $25,000. You get in an accident and cause $40,000 worth of damage to the other driver's car. Your friend's insurance would cover the first $25,000 of damage and your nonowner insurance would cover the remaining $15,000 — provided that your own property damage liability limits are set at $40,000 or above. If not, you're on the hook for the $15,000 not covered by your friend's policy.

While many drivers would like to purchase temporary car insurance, it's not something trustworthy insurers sell. But that doesn't mean you can't get auto insurance for short-term situations. Talk to different insurance companies and see how they can help you temporarily adjust your coverages for your unique situation. And always be sure to shop around to ensure you're getting the best rate.

Mark is a Senior Research Analyst for ValuePenguin focusing on the insurance industry, primarily auto insurance. He previously worked in financial risk management at State Street Corporation.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.