What is Temporary Car Insurance and How Does it Work?

When you think of car insurance, you may think of a long-term contract with coverages that you don’t need. You wouldn’t be the only one. In my experience in the insurance industry, I found that most drivers have no idea how their policies work.

And it’s not just anecdotal. Studies show that 40% of drivers believe they have coverage that doesn’t exist. So it’s not surprising that drivers are looking for temporary car insurance, even though it’s not something that most U.S based carriers provide.

But all hope is not lost. If you find yourself in need of car insurance just temporarily, there are options for you. Here is what you need to know.

There are a few reasons why you may need car insurance temporarily. Here are a few examples:

• You sell your car but need to rent a car for a few weeks
• You primarily live in another country but are visiting the U.S for a short time
• Your child is away at school but has the use of a car on campus
• Your babysitter will be using your car during the summer

How Does Temporary Car Insurance Work?

As mentioned, temporary car insurance is defined as any term shorter than 6 months. Most standard carriers have six to twelve-month terms and many don’t penalize you for canceling your policy early. With 77% of car insurance customers switching carriers in the last 3 years, insurance companies are no strangers to turnover.

While insurance companies may prefer that you remained a customer for the life of the policy, it’s not a requirement. And disclosing how long you need the insurance for is not something that is typically asked of you when you purchase. You can still purchase a standard auto policy even if you plan to sell your car soon after you insure it, for example.

In this scenario, you can purchase the policy as you normally would with any standard carrier. When you are ready to cancel, whether that is in 6 months or 6 days, you call your insurer to do so.

What Is the Difference Between Temporary and Short-Term Car Insurance?

Temporary car insurance is sometimes referred to as short-term car insurance. The terminology is used interchangeably to describe any policy that is needed for less than a standard policy term offers. There is no difference between the two.

Can You Get Temporary Car Insurance on Any Vehicle?

Similar to temporary insurance on private passenger cars, you most likely won’t be able to find temporary insurance on other types of vehicles, such as vans or motorcycles. However, it is often easier to find a standard insurer for each and cancel when you no longer need the policy. Here is a breakdown of different types of cars and whether temporary insurance exists and some possible alternatives.

Can I Get Temporary Insurance to Drive a Van?

If you are driving a van for a short time, you may think that you need temporary car insurance. However, depending on the scenario, there may be different alternatives. Obtaining insurance through the rental company if you rent a van is a good example.

Companies that rent out vans will usually offer insurance you can purchase to cover that vehicle. This is a good alternative for those that don’t have their policy and need a temporary solution.

Is There a Temporary Motorbike Insurance Coverage?

Surprisingly, obtaining temporary insurance on a motorbike or motorcycle may be more feasible. This is because they generally aren’t driven for certain parts of the year, so temporary insurance coverage is more common. Chatting with an independent insurance agent is the best way to determine which companies offer these policies.

But you have other options if you don’t want to purchase a temporary policy. Most companies allow insureds to suspend liability to account for when vehicles are not being driven. This is sometimes referred to as storage insurance.

When your car or motorcycle is in storage for a bit, you can suspend liability coverage, which means you wouldn’t have coverage to drive. However, you would have comprehensive coverage, covering you for things that could happen to your car in storage, such as vandalism, fire, theft, or hail. This is sometimes a better option than purchasing a brand-new temporary policy.

While temporary car insurance seems to be more prominent in other countries, it hasn’t yet reached that level of popularity in the United States. Luckily, there are some alternatives to these policies, depending on the situation. These are some of the other options you may want to consider.

Standard Car Insurance Policy

With a standard car insurance policy, you don’t have to worry about where to find the coverage. Policies are readily available via independent agents or direct channels. Terms usually run between 6 months to a year, and you can typically cancel earlier without penalty, depending on the company and state you live in.

Non-Owner Car Insurance

A non-owner policy is a perfect alternative for someone who doesn’t own a car but has access to one. Unlike a standard car insurance policy that insures the vehicle and you as a driver, a non-owner policy insures you regardless of which car you drive. So if you are renting vehicles to get around or borrowing a friend’s car, you will have the coverage you need.

Like a standard auto policy, most non-owner policies run six to twelve-month terms. Depending on the state and the company, there may not be any penalties for canceling the policy midterm. So these policies are a much better option for temporary car insurance, especially if you don’t have a specific vehicle to insure.

Permissive Use Coverage

Based on a recent Verisk study of undisclosed drivers, as much as 12% of all auto claims stem from drivers who aren’t listed on the insurance policy. How can this be? Don’t you have to be listed on the policy to have coverage?

Not exactly. Many insurance contracts have a permissive use clause stating that anyone you permit to use your car is covered. However, there are some stipulations.

Insurers require that you disclose any driver who regularly uses your car or lives in your home. If you fail to do this, you could risk a claim denial or cancellation of your policy. So it’s important to be upfront with your insurance company.

But this coverage obviously exists for a reason. If you truly are only using a vehicle once in a while and not on a regular basis, taking advantage of the permissive use clause is a way to avoid purchasing temporary insurance. I would just recommend the policyholder speak to their insurer to get their definition of  “regular use” to avoid any issues with any future potential claims.

Rental Car Insurance

29.2 million cars are rented each year globally. And with over 6 million car accidents a year in the US alone, that is a pretty big exposure for rental car companies. It’s no surprise they offer insurance coverage for their vehicles.

You don’t need your own insurance policy in order to rent a car. In fact, this is why it’s a great option for drivers who may only need a car temporarily. Most rental car companies offer some protection for the car itself, but minimal coverage for third-party liability, so that is something to take into consideration.

There may be some coverage offered through your credit card as well. But it’s always a good idea to check with your credit card company to be certain. Lastly, there are outside companies that offer coverage for rentals, such as Bonzah, Rental Cover, or Sure.

These options are better than temporary car insurance since they are readily available and created for the purpose of renting a car. In some cases, like using your credit card to cover damages, there is no policy to worry about canceling. Overall, it’s more convenient than trying to find a temporary car insurance policy.

Usage-Based Car Insurance

While usage-based car insurance isn’t a temporary solution, it does help safe drivers who may not drive that often. Unlike a standard auto policy that may look at your annual mileage or past driving behavior to base your price, usage-based insurance tracks how much and how well you drive via an app or in-car device. Drivers who stay safe on the road and drive minimally can often save money on their insurance.

Usage-based insurance is a more attractive option than temporary insurance because it can often save you money without having to sacrifice the time you were insured. Many auto insurers are adding telematics to their products, so it is also becoming more widely available to customers.

Pay-Per Mile Insurance

Similar to usage-based insurance, pay-per-mile policies use your actual driving data to determine how much you pay. But instead of looking at how well you drive, they primarily focus on how much you’re driving. This can be an attractive option for those with seasonal vehicles.

For example, suppose you own an all-wheel drive SUV that you use in the winter months and a convertible that you use in all other parts of the year. You can purchase a pay-per-mile policy for both cars and only pay for the time you are using each. It is far more efficient and cost-effective than having a temporary policy.

Distant Student Discounts

Students away at school may not have access to a car until they are home for breaks and holidays. Many parents assume that they can remove their child from their auto policy to save some money since they’re not driving. However, consider a common scenario.

Your child is the designated driver for a night out with friends and is driving a friend’s vehicle. If an accident occurs, there may be some coverage for your child. But if the damages exceed the limits under the policy, you may be personally liable for the excess, especially if they have been removed from your policy as a driver.

Rather than worry about a temporary solution for this scenario, a better option would be to leave your child on your policy. You can save money by inquiring about a distant student or student-away discount. These discounts will afford you the peace of mind that your child is covered, while not completely robbing the bank.

Add a Named Driver to Your Policy

Drivers that frequently use someone else’s car should be listed on the policy of the person who owns the car, rather than obtaining a temporary policy for themselves. This is primarily because you cannot insure a vehicle you don’t own. The best solution in these scenarios is for the owner of the vehicle to add that driver to their policy.

Insurance companies will require any drivers of the vehicle to be listed on the policy anyway, so it would be an easy add. Just be sure to call and remove the driver when they are no longer using the car as their driving record can affect the price of your policy. Remember to be cautious with who you let use your car!

How to Get Temporary Car Insurance?

Obtaining temporary car insurance may be difficult as it’s not as readily available in the United States. But since it’s a unique offering, your best place to start is with an independent insurance agent. They typically have more access to non-standard policies so they can at least point you in the right direction if it’s available.

If any of the alternatives to temporary car insurance mentioned previously are viable options, then you should contact your insurance company. They will be able to add drivers, discounts, or endorsements that provide you with the coverage you need. They may also have other suggestions based on your scenario.

Obtaining any type of car insurance will require you to provide specific information about yourself such as your address, driver’s license number, and date of birth. You will also need your vehicle identification number, and the year, make, and model of your car. If any other drivers should be included in your policy, you will need their information as well.

How Long Does Temporary Insurance Last?

Temporary insurance is defined as any policy that lasts for fewer than six months. However, companies that are advertising policies with shorter terms, such as weekly, daily, or hourly are often not legitimate. Before committing to any policy, it’s imperative to do your research and know exactly what you’re buying.

How Much Does Temporary Car Insurance Cost?

On average, car insurance costs an average of $1,330 annually, which comes out to about $111 per month. But car insurance rates will vary depending on the state you live in, your driving record, and the type of car you drive, among other factors. To get an accurate price of what car insurance will cost you, you should get quotes from a few companies.

Since temporary car insurance policies are not easy to get, your best option is to purchase a standard auto policy for the amount of time you need coverage. When you no longer need it, you can cancel. This works best for situations where coverage is needed for fewer than six months but more than a day or two.

Most insurance companies determine refunds by looking at a price per day amount. For example, if you purchase an annual policy with a $1,500 premium, that amounts to $4.10 a day. So if you pay for a full month but end up canceling after two weeks, you would only owe $57.53 (plus any applicable fees associated with your policy) and be refunded the difference.

If you are looking to add rental car insurance to a vehicle you rent, the price per day will vary by company. Here is a breakdown of some of the more popular rental car companies.

When Would You Need Temporary Auto Insurance?

There are a few different situations where you may need insurance for a short amount of time. Some of the more common scenarios are outlined below. But remember to also consider some of the alternative solutions described previously.

Temporary Coverage for Student Drivers

As a student, especially if you are attending school away from home without a car, you may not need year-round insurance coverage. Perhaps you are only using a car when you are home for the holidays. If this is the case, you may seek temporary coverage for the time you are back home.

An option here would be to remain on your parent’s policy. Some insurance companies allow exclusions for drivers, meaning that you wouldn’t be covered to drive, but your parents wouldn’t be charged for you either. When you’re home, you can remove the exclusion to drive and only pay for the time you were driving.

Temporarily Adding Someone to Your Car Insurance

Another common scenario where you may need car insurance temporarily is when someone is going to be using your car for a short time. When I worked in customer service, I would see this situation frequently with nannies or au pairs. Parents would hire a nanny for the school year and wanted them insured to use their car during this time.

They can be added to the policy as a driver and then removed when they are no longer living in the home or using the car. Just be warned that adding a driver can be a lot easier than removing one. Insurance companies will frequently require proof that this driver is no longer an exposure, which can mean providing documents that they don’t live with you or have their own insurance policy.

Temporary Car Insurance for a Rental Vehicle

Renting a car usually requires some type of insurance to protect the rental car. If you already have a standard auto policy, that coverage will carry over to the rental. However, in cases where you don’t have an underlying policy, you will need some sort of temporary solution.

Fortunately, you have a few different options. You can either purchase insurance through the rental car company, get coverage through your credit card or obtain insurance through a temporary insurer.

Temporary Car Insurance for Drivers Who Don’t Own Cars

If you don’t own a car, you may still have access to them. Whether it’s borrowing a friend’s car or renting one, it’s a good idea to have insurance on the car you’re driving. While insurance typically follows the car and not the driver, you don’t always know if the car is insured or what coverage it carries.

A temporary policy that can be useful in these scenarios is a non-owner policy. This policy typically offers six to twelve-month terms. But like a standard auto policy, you can cancel whenever you no longer need the coverage and usually without penalty.

Temporary Car Insurance for Infrequent Drivers

Those that aren’t driving frequently are also in need of insurance coverage. However, where they get that coverage may depend on how infrequently they drive. This is because most insurance policies offer permissive use.

If you are not driving regularly and the owner of the car gives you permission to use it, coverage on their auto policy should extend to you as well. However, if you’re driving regularly, you’ll need your own temporary auto policy or to be added as a driver to their policy. A non-owner policy may be an option here as well.

Temporary Car Insurance for International Drivers

For international drivers who are moving to the U.S., you may need temporary car insurance to match the length of time you are allowed to drive on an international license. This amount of time can vary by state but is usually up to three months. Some standard auto insurers may also allow you to be added as a driver until you obtain your U.S. license.

Temporary Car Insurance for Vehicles in Storage

Some vehicles are only used in certain seasons or for small windows of time. This is common with motorcycles as well. A temporary auto policy will allow coverage for the time the vehicle is being driven.

However, almost all states require insurance on vehicles with active registrations. So insuring a vehicle temporarily may not be compliant with state regulations. It’s best to check local laws to ensure you’re not penalized.

When Is Temporary Car Insurance Not Needed?

While not having to pay for a full six to twelve-month policy term seems tempting, it’s not always the best option. Here are some of the scenarios where a temporary car insurance policy is not needed.

You Own a Car and Drive Regularly

If you own a car and you’re using it regularly, temporary car insurance is not for you. You will need a standard auto policy to legally drive. Standard auto policies typically run between six or twelve-month terms, depending on the state and company.

You Borrow a Friend’s Car Once

There may be times when you need to borrow a friend’s car, or you’re driving it for them in an emergency. These scenarios don’t typically require a temporary policy because of the permissive use clause in most policies. If you start to use the car more regularly, however, you will need to re-assess the coverage needed.

You Are Test Driving a New Car

Car dealerships often have insurance coverage for the cars they sell. So no need to worry about obtaining temporary insurance if you are in the market for a car and taking them for test drives. But remember that you will need proof of insurance in order to purchase and drive off the lot in the majority of cases.

Best Car Insurance Companies for Temporary Insurance

When searching for the best companies for temporary car insurance, you will want to review a few things. First, review the company’s AM Best rating to ensure they’re financially stable. A company that has a rating of B+ or better with AM Best is usually solvent enough to pay claims.

Secondly, do some research on their customer service and claims handling. You’ll hopefully never need to use your insurance coverage, but if you do, you’ll want a company that has a good reputation. Getting in touch with your company is equally as important so pay attention to reviews regarding how easy or difficult it is to speak to someone when you need them.

Lastly, and most importantly when it comes to temporary insurance, find out if the company charges cancellation fees. Some may have this information on their website, while some may require speaking to a representative. Either way, you want to make sure you won’t be penalized for canceling the policy when you no longer need it.

I always recommend doing your own research, as not all companies are licensed to write in each state. But based on my experience, I have compiled a list of the best insurance companies for temporary coverage. Remember to check and confirm the information is correct as companies may change or restrict coverage.

*Customer reviews are based on industry standards, availability, coverage, cost, and overall customer experience.

Why Some Car Insurance Companies Don’t Offer Short-Term Policies

As I’ve mentioned a few times, most standard auto insurers will not offer short-term policies and the main reason for this is due to the cost of acquisition. It costs insurance companies money anytime they write a policy. Consider the fees associated with running consumer reports, for example. It simply isn’t profitable for them to acquire customers only for the policy to expire after such a short time.

Should I Get Short-Term Car Insurance?

In my experience, short-term policies are not worth the time and energy it takes to find a company that offers them. With all the alternatives available, such as non-owner policies, permissive use clauses, and rental car insurance, there is no shortage of options. Your best bet is to talk to a licensed insurance expert who can advise you on the most ideal solution for your scenario.