Temporary & Month-to-Month Car Insurance – How It Works
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Insurance can be a complex topic for many people, and it can be difficult to find the right type of coverage for your needs. For many people, purchasing temporary car insurance is a great option because it provides short-term coverage for a relatively low cost. Whether you’re looking for coverage for a used car, or a simple gap-fill between policies, a temporary car insurance can provide you with the peace of mind you need.
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What is temporary car insurance?
If you're a driver in all but two U.S. states (looking at you, Virginia and New Hampshire!), you probably have some sort of auto insurance. But what if you need to rent or borrow a friend's car? That's when you might want to consider getting temporary car insurance.
This type of coverage is for people who don't own a car but need one for a short amount of time, typically for a period shorter than the usual six-month policy
. For instance, it can be useful to people who need to borrow a vehicle while their own is being repaired. It's also a good option for people moving to a new city who don't have immediate access to a car. Because temporary insurance can be useful, many rental car companies offer it as an add-on.
Finding temporary insurance can sometimes be tricky, though. That's because traditional insurance companies rarely offer it as a standalone product. But there's good news — some companies offer temporary car insurance that can provide coverage when you need it most.
Related: How to Customize Your Auto Insurance Policy
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Types of temporary car insurance
Several types of temporary auto insurance are available depending on the needs and budget of the individual buying the auto insurance policy. Some of the most common types of temporary insurance policies include:
Daily rental coverage
This insurance policy provides coverage for the cost of renting a vehicle from a rental car company for the duration of the trip. It does not cover the actual cost of renting the vehicle. However, rental car insurance offers users protection against theft and collision damage. Most policies provide this coverage up to a certain limit, such as $1,000 per day or $3,000 per week. The coverage is typically valid for 30 days, and many credit cards also offer some type of coverage if you pay for the vehicle using the card. You may also not have to be a deductible if you get extra insurance from the rental car company.
Non-owner coverage
These types of policies are for people who do not own a vehicle but still need to drive occasionally. They provide liability protection in the event of an accident and offer no coverage for physical damage to the car. This means that there is no coverage if you hit another vehicle or damage your own car. These policies also typically have higher insurance premiums than a regular policy. Non-owner car insurance comes with bodily injury and property damage coverages.
Liability coverage
As the name suggests, this type of policy is designed to cover damage caused by you, not any injuries you sustain. This type of policy usually costs less than other types of temporary insurance because it provides less protection. For example, a liability-only policy typically costs around $20 per month.
How much does temporary car insurance cost?
Many factors influence auto insurance premiums, from Where you live, which car you drive, when the vehicle was manufactured, and your driving record. Expect to pay around $51 for one month of coverage, if you hold a temporary car insurance policy for one to three months, get a full refund and sidestep a cancellation fee.
When do you need temporary car insurance?
Driving in an unfamiliar country can be a stressful experience, especially considering you're unlikely to be aware of the driving conditions in the country you are visiting. But this does not mean you have to forgo the pleasure of traveling abroad because you have to risk driving in a foreign country. If you want to protect your car or someone else's while you are on the road, you should consider purchasing a temporary insurance policy.
There are a few other scenarios when temporary auto insurance may prove useful:
- You can insure your rental car if you are taking a trip with a friend who has a car but no insurance.
- If you are buying a used car from a private seller, you can use a temporary policy to cover it until you are certain the car is safe to drive.
- If you need to borrow a friend's car for a short period of time, you can purchase a temporary policy to protect it until your car is repaired
- Many rental companies require you to purchase a temporary policy before renting you a vehicle.
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Who doesn't need temporary car insurance?
These policies are ideal for people who frequently drive cars they have not purchased. They are also a good option for people who regularly use rental cars for short periods. However, they are not suitable for people who own cars. Because these policies are short-term in nature, they do not provide comprehensive protection for your car; they only provide liability protection in the event of an accident. This makes them unsuitable for people who own a car because it provides inadequate coverage in case of a claim.
In addition, these insurance policies are unsuitable for high-risk drivers such as teenagers or individuals with a history of traffic violations or accidents. Because they offer only limited coverage, these policies are unlikely to offer adequate protection to these individuals in the event of an accident.
Insurers offering temporary car insurance
It's important to note that temporary car insurance doesn't exist, and any company offering one-day or one-month insurance is likely looking to scam you.
Many reputable car insurance companies do not offer short-term car insurance as a standalone product. However, there's a workaround: You can simply sign up for standard car insurance in six-month or one-year increments as you normally would and then cancel it after 30 days, hopefully avoiding any cancellation fees.
Nationwide
An online estimator tool that gives you estimated car insurance quotes, collector and classic car coverage, and lower insurance rates are just some things going in Nationwide's favor. It's easy to get a quote, and you don't need to go to a branch to inquire about non-owner car insurance; just pick up the phone and talk to an agent. The best part? Nationwide doesn't charge cancellation fees. And when you need to file a claim, you can do so over the phone, online, or through their mobile app. The Nationwide website also has a claim tracking tool; you can find repair workshops there too.
Hagerty
If you have classic or collector cars, this one is for you! Hagerty isn't too straightforward about rates on its website but claims it can help you save 36% on premiums. Nationwide is the underwriter for Hagerty, and if you have a past DUI or are a high-risk driver, Hagerty won't insure you. Claims can be filed online on through a phone. If cancellation is requested in the first 60 days of the current membership term, you will receive a full refund, the company says on its website.
GEICO
GEICO offers many discounts, including for cars kept at the same address. If you had a car with GEICO insurance and that vehicle totaled or is inoperable, the existing policy would cover you while driving a rental. You'll get to keep your tenure, discounts, and benefits for your next car. The company also offers non-owner insurance, which provides coverage for damage sustained by another car when you borrow or rent a vehicle. Putting your car in storage for more than 30 days? You may be eligible for reduced rates. GEICO doesn't charge cancellation fees.
Progressive
Progressive boasts a seamless claim process thanks to its Photo Estimate Tool, which entails taking a picture of the damage with your phone and uploading it for a claims specialist to take a look. The status of your claims can also be tracked online, which is a good thing to have if you're only looking to keep insurance for a month. Speaking of, the company may charge a fee if you cancel the policy within the first term.
Allstate
Allstate's usage-based insurance
Milewise means you can get the same coverage and claims support but only have to pay based on how far you drive. This means you don't have to pay when you're not driving your car. But unlike other big insurers, Allstate doesn't have loyalty discounts, but there are discounts on new cars and for people who practice safe driving habits. The company also offers rideshare insurance, and claims can be filed online, through the app, or with an agent. Allstate doesn't charge any cancellation fees either.
State Farm
State Farm is the largest auto insurance company in the U.S. and has a history of 100 years. Its coverage options include collision, liability, uninsured motor vehicle, underinsured motor vehicle, medical payments, and comprehensive coverage. The process to obtain the quote is simple, fast, and easy, and it can be done online. State Farm has a ton of discounts available, from multiple policies to good driving for college students. Just like other insurers on the list here, State Farm doesn't hit you with cancellation fees.
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Benefits of temporary car insurance
Benefits of temporary car insurance include the following:
- Protects drivers from liability expenses in cases when the driver is at fault for the accident.
- Protects vehicle owners who frequently rent cars or borrow them from friends and family.
- Provides additional coverage for individuals who do not qualify for traditional auto insurance due to previous driving violations or poor driving records.
- Can be used to cover gaps while waiting for a permanent policy to be issued or renewed.
FAQs
Do insurers offer temporary insurance as a standalone product?
No, but you can get the standard six-month or 12-month policy, and then cancel it after 30 days. Many insurance providers do not charge a cancellation fee.
How much does temporary insurance cost?
There are many variables that come into play and each person's rate will be different, but you can get this type of insurance for the price of an oil change.
Can I pay month-to-month for car insurance?
Yes, most insurers allow you to pay each month even if the policy is for a six-month period. You can cancel the policy when you no longer need it, and you'll get a refund for any overpayment.
Use QuoteOutlet to Save Money on Car Insurance
- Save up to $610 Per Year on Car Insurance
- See Quotes in Minutes
- Compare 30+ Insurance Providers
- Switch Online or Speak to a Licensed Agent
- No Fees to Check Rates, Ever
The bottom line
Short-term auto insurance options can be a low-cost way to protect yourself against the financial consequences of an accident. It is normally designed for short-term use. Whether you are buying a new car or want to temporarily replace your damaged vehicle, a temporary insurance policy can help you stay protected until you can purchase a more permanent one.
Temporary auto insurance offers basic protection against the costs of vehicle damage. It does not include any coverage to protect against medical bills resulting from injury in an accident. Many types of temporary insurance policies are available, and it is important to choose the right one for your needs. Although all temporary insurance policies share some common features, there are some significant differences between them. These policies are ideal for people who frequently drive cars that they have not purchased.
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Writer
Jasir Jawaid is Joy Wallet's Assistant Editor. He has more than 13 years of experience as a journalist covering Wall Street, equities, financial policy and regulation, and cryptocurrency and blockchain.
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