What Is Short-Term Car Insurance?

How Does Short-Term Car Insurance Work?

In most states, motorists are required to carry auto insurance, even if they're driving a car they don't own. In some cases, a person might need car insurance for only a short time. For instance, you might not have your own car but might need to borrow a friend's car for a couple of months and want to avoid being saddled with a six- or 12-month policy.

Generally, a short-term car insurance policy only provides basic liability coverage. Liability coverage pays for damage to other cars or property as well as injuries to other people that you cause when you're behind the wheel. Liability coverage does not, however, pay for your own injuries or damage to your own car. But going without any coverage at all could stick you with thousands of dollars in repair, medical and legal bills.

When Do You Need Short-Term Car Insurance?

A number of scenarios may pop up when you need temporary car insurance. They include situations when you lack car insurance and are:

• Borrowing a friend's or relative's car for a short period. You probably don't need temporary coverage if you're borrowing the car for only a few hours.
• Renting a car for a few months. You likely can skip other kinds of temporary insurance if you buy coverage from the rental car company or you rent the car with a credit card that provides rental coverage.
• Driving another person's car while your car is being repaired.
• Getting behind the wheel of somebody else's car while you're on a road trip.

How Much Does Short-Term Car Insurance Cost?

Short-term car insurance coverage typically costs more on average than if you buy a six-month or 12-month policy. Temporary policies can run as high as $200 a month and often have 30-day minimums, even if you need coverage just for one day or one week.

In 2018, the latest year for which data is available from the National Association of Insurance Commissioners, the average monthly premium for a car insurance policy covering liability, comprehensive and collision was $99.17.

In addition to the state where you live, factors that typically affect car insurance rates include:

• Age
• Gender
• Driving history
• Driver experience
• Claim history

In states where it's allowed, insurers may check your credit-based insurance score when you apply for coverage, whether it's short-term or not. A credit-based insurance score typically is based on your credit report from one of the three major credit bureaus: Experian, TransUnion and Equifax.

How to Find Short-Term Car Insurance

The Insurance Information Institute recommends working with a local insurance agent to obtain several quotes for short-term coverage.

You might be tempted to simply purchase a standard six- or 12-month policy and cancel it before it expires. In effect, that would be temporary coverage, and it's possible to make it work. But you might end up paying for this decision in the long run, as your next insurer might punish you monetarily if you've got a gap between policies. Gaps in coverage can boost premiums by as much as $15 a month.

To bypass temporary coverage of 30 days or less, explore the following options.

Non-Owner Insurance

Non-owner car insurance covers you when you're driving a car you don't own, such as one you're borrowing from a friend. You usually can buy non-owner coverage in six- or 12-month increments, sometimes from major insurers. It normally costs less than regular coverage does, and you can cancel it before the policy period ends to steer clear of paying for coverage you no longer need.

Companies that sell non-owner insurance include Allstate, Elephant and Geico.

Rental Car Insurance

Although rental car insurance can be pricey, it might be an alternative to standard or non-owner coverage. Rental car companies sell this coverage, which won't affect the rates you pay for any personal coverage you have. In addition, some credit cards provide rental car coverage as a perk.

Permissive Driver Coverage

Most car insurance policies contain what's known as permissive driver coverage. This coverage supplies protection when a driver who's not listed on a policy—but who received permission to drive the owner's car—gets into a mishap when they're behind the wheel. If you need to borrow a friend's car and they have this coverage, you'll likely be covered.

Reduced Coverage for a College Student

Let's say your child is away at college for much of the year and leaves their car at your home. In this instance, you might consider decreasing the coverage to the minimum amount required—which could lower your premium.

Another possibility: Many auto insurers let you temporarily exclude a child from your policy who has left for college, as long as the school they're attending is more than 100 miles away from home. When the school is less than 100 miles away, auto insurers figure there's a good chance that your child may return home fairly and use your car, thereby eliminating the opportunity to get an exclusion. You'll just have to remember to stop and restart their policy as necessary.

Pay-per-Mile Coverage

While not considered short-term, you might consider pay-per-mile coverage, also known as pay-as-you-go or usage-based coverage. This coverage can be a cost-effective option if you don't drive your car all that much. It bases your premium on your actual driving behavior, as tracked by an app, instead of how an insurer thinks you'll drive. Some insurers sell only pay-per-mile coverage, while others provide usage-based discount programs.

The Bottom Line

As you're shopping for short-term car insurance, keep in mind that it might cost more than traditional car insurance covering six- or 12-month periods. Also, remember that alternatives, such as non-owner insurance and rental car insurance, essentially offer temporary coverage but perhaps with fewer road bumps.