What is Temporary Car Insurance and Should I Get It?

What is Temporary Car Insurance and Should I Get It?

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Temporary car insurance is a short-term way to insure a car you’re driving, whether it’s your own car, a rental, or a car you’re lending to or borrowing from someone else. We’ll explain what shorter terms auto insurance policies are available, what coverage entails, how to get it, as well as help you determine if it is best for you.

What is Temporary Auto Insurance?

Insurers do not sell temporary or short-term car insurance for less than six months at a time. Websites may lure you in with the promise of one-day, seven-day or 28 day auto insurance coverage, but the shortest you will get from major reputable insurance companies is a six-month policy that you have to cancel part way through. We spoke with agents from major insurers such as State Farm, GEICO, Allstate, Farmers and National General, and they all confirmed this.

While short term coverage makes sense under several circumstances, your existing auto insurance coverage and insurer might be able to accommodate you. If you don't have one, check to see if non-owners insurance makes more sense. Typical examples of needing short-term coverage include: having a different driver operate your car, placing your car into storage, or even buying a new, used vehicle.

How Does Short-Term Car Insurance Work?

Getting a short term car insurance policy will be very similar to a traditional auto insurance policy. You’ll choose the amount of coverage, which will range from your state’s minimum insurance requirements to higher limits if you have more assets to lose. Many states require liability coverage, and depending on where you live, you can opt into personal injury protection, collision and comprehensive, or other types of coverage.

How to Apply and Get Short-Term Auto Insurance

The shortest term car insurance you can buy in the U.S. will be six months. You’ll have to purchase a policy for half a year, pay on a month-to-month basis or prepay the amount and request a refund. Either way, set up a reminder before a week or month (however long you need it for) is up to cancel. Be sure to obtain a cancellation confirmation number, and to note the time, date, and representative you spoke with.

Complaints of payments being processed despite cancellation, or refunds taking a long time can be common. Most companies, including the three largest—State Farm, GEICO and Allstate, don't charge cancellation fees and will refund any unearned premiums. If you cancel coverage during the sixth week, but only paid for four weeks, they'll send you a balance due for the two extra weeks.

As with a traditional policy, 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. You’ll need to be a licensed motorist, provide the vehicle identification number of the car you want to cover, and answer basic questions about your driving history and location to get temporary insurance.

Be wary of sites that promise to offer you one-day insurance, seven days coverage, or anything less than one month in America. Submitting your information for a quote online or calling their telephone number will usually route you to a regular licensed agent, that could only offer six month policies at a minimum.

When Should You Get Short-Term Auto Insurance?

There are a couple of circumstances where it might make sense to get temporary auto insurance that is separate from your existing policy.

Adding a New Driver Temporarily

Most coverages extend to people you give permission to temporarily, but some policies only cover members of the household who are explicitly listed. If a friend, relative or someone else will be driving your car for a short period of time, check with your insurer to see if they’re covered. Oftentimes, your son or daughter returning home from college will be covered (usually if they're driving for less than a month). If they’re not covered consider getting them a separate temporary policy.

Safeguarding Against Claims or Different Risks

Having young or inexperienced drivers get their own temporary policy could be a good way to safeguard against the increased premiums that could result from them having to file a claim against your insurance. However, it comes down to weighing the premium for their standalone temporary policy against the risk of rates being higher if they end up filing a claim.

Placing a Car in Storage

A temporary policy 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.

Driving a Temporary Rental Car

Another good use of temporary auto insurance is insuring a rental when your car is in the shop or you’re on vacation. While some regular insurance policies or credit cards cover rental insurance, short-term car insurance might be more affordable than the insurance from a rental car agency and will protect you for as long or short as you desire. Most credit cards typically offer secondary insurance on collision only (they want you to first file a claim with your car insurance first).

Temporary Car Insurance vs. Non-Owner Car Insurance

If you’re frequently driving a car you don’t own, non-owner car insurance might be a more appropriate and affordable option for you than either normal or temporary car insurance. Traditional insurance will be too much coverage for something you won’t use everyday, and you may have to monitor or extend temporary car insurance periodically.

With a non-owners policy, you’re protected regardless of which vehicle you drive. A non-owner car insurance policy provides liability coverage, which is mandatory in most states. Since liability coverage follows you, not the car, you’ll always be covered regardless of whose vehicle you’re driving, whether it’s a friend’s, a rental, or it belongs to your employer.

The downside is that non-owner car insurance doesn’t provide comprehensive coverage, meaning you’d be on the hook for damage to the car sustained from an accident or collision.

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.