Can I Buy One-Month Car Insurance?
If recent circumstances have prompted you to contemplate temporary car insurance as a solution to a pressing, if temporary, auto-insurance gap, your best bet is to sign up for a six-month policy and cancel early, if you must.
However, there are a lot of ifs, ands and buts involved with securing a temporary car insurance policy on a month-to-month basis. Let's dive in, shall we?
Car Owners vs. Car Borrowers
Every car insurance policy covers one specific car as well as all the drivers who are listed on that car's policy. Typically, the "primary driver" is the owner of the car and the policyholder, and any "secondary drivers" usually live in the same household as the primary driver.
But most car insurance policies cover the odd trip by a driver who is not listed on the policy. For example, if your friend borrows your ride to make a grocery run for your big Fourth of July barbecue and causes a car accident, your insurance will more than likely cover that accident.
However, if your friend or family member is going to borrow your car for a week, a month or even a year, you must contact your auto insurance company to inform your licensed agent of this fact. If you do not inform your auto insurance company about this new, unknown, long-term driver, your carrier may deny you coverage should that driver cause an accident.
Do Away-From-Home College Students Need Temporary Car Insurance To Drive the Family Car?
If you have a college student who lives away from home and only uses the family car when school is out of session, your collegian will definitely be covered by your auto insurance if their name is listed on your policy. In short, temporary car insurance is not necessary in this situation.
In fact, when your kid goes off to college, you should contact your auto insurer: Since your scholar will now be driving the car so infrequently, you may be eligible for a so-called student-away discount. This money-saving deduction recognizes that you are less likely to file an accident claim now that your high-risk driver is away at school. Many auto insurers offer this discount, so be sure to ask.
Legit Reasons Why You Might Need Temporary Car Insurance
Auto insurance carriers usually offer six-month or 12-month policies. In fact, they rarely offer month-to-month car insurance or one-month car insurance. So, are you a good candidate for temporary insurance? If you are dealing with any of the scenarios described below, a car insurance carrier might hook you up with month-to-month coverage:
You are driving someone else's car for a rideshare service (Lyft, Uber) until you buy your own set of wheels.
You are driving someone else's car for a short-term or seasonal job.
You are driving someone else's car and want to supplement the car owner's insurance.
You are planning on owning a vehicle for less than six months.
You are planning to drive a rental car over the next few months but refuse to pay the car rental company's higher-than-average fees.
But car insurance companies are all different because they all calculate risk in their own way. Even if your situation is exactly like one of the situations described above, you still may not qualify for short-term car insurance. But you can still find a cheap six-month plan; if you shop around, you'll probably find one that's cheaper.
Some Other Legit Reasons You Might Need Temporary Car Insurance
Car insurance coverage is the law: You must have your state's mandated minimum liability auto insurance before you get behind the wheel of a car. Usually, liability policies last for up to a year, but you may qualify for short-term car insurance if:
You let someone borrow your car, but now you yourself need a car to drive until your vehicle is returned.
You are a licensed driver who wants to rent a car while on vacation, but you have no insurance.
You are going on a road trip, but you're driving someone else's vehicle.
You need a car while your car is in the shop.
You are adding a vehicle to an existing policy for a short period of time.
If you are approved for temporary insurance, be prepared to pay a higher rate for your pay-by-the-month insurance than you would if you purchased a six-month policy.
Temporary Car Insurance - Get the Cheapest Rates
Month-to-Month Insurance May Require a Down Payment
If you do happen to snare a short-term auto policy, most insurers will ask for a down payment of at least one month and possibly two months of the total premium. If you cancel your short-term policy early, you might not get back your whole down payment.
When you do find an insurance provider that offers temporary coverage, you'll need to make sure you're able to use it for the full policy period. Most companies will require a down payment of at least one to two months of the total premium.
Month-to-Month Insurance and Regular Insurance Require Proof
Technically, you should only drive your car after you have received in the mail your insurance card, whether you have short-term or long-term coverage. In fact, the law in every state requires every licensed driver to have proof of insurance.
If you get behind the wheel before you have received your proof of insurance, you are driving in a grace period. However, if you get into an accident, you may not be eligible for the full coverage as promised by your policy, whether that is a short-term or long-term policy.
Why Do Auto Insurance Companies Frown Upon Month-to-Month Insurance?
Sustained by the financial strength that only comes from long-term stability, car insurance companies offer auto insurance plans that cover an extended period of time.
Indeed, a foundation of dependable, long-term policyholders allows an auto insurance company to identify, track, calculate and compensate for the risk factors that, all together, determine the company's overall liability to negative outcomes. Much like you and me, auto insurance companies seek clarity in uncertain times.
Furthermore, auto insurance companies view temporary car insurance as higher-risk coverage, which means you'll most likely be paying a higher insurance rate for your temporary car insurance than if you were to purchase a six-month or 12-month policy. Not only that, you'll be eligible for many, many discounts if you purchase a six-month or 12-month policy, unlike temporary car insurance.
Does Temporary Car Insurance=Pay-As-You-Go Auto Insurance?
Some insurers, like Nationwide, offer pay-per-mile insurance for people who drive less and want to save money but even those policies cover six months or more. Pay-as-you-go, or usage-based, auto insurance is based on the miles a car is actually driven. In short, the fewer miles you drive, the fewer dollars you'll have to pay for your policy. If you are in this program, your insurance carrier will track your miles by installing a tracking device on or in your vehicle.
However, pay-as-you-go auto insurance is not temporary car insurance. Further, most companies offer pay-as-you-go coverage to customers with a six-month or 12-month policy.
What Will Happen If I Cancel My Six-Month Policy Early?
First of all, you can cancel your auto insurance policy any time you want, no matter what kind of insurance you have. However, you should only cancel your insurance policy after you have secured another, perhaps cheaper insurance policy. Indeed, driving without insurance or having lapses in your insurance history is a big, big mistake that can have long-term financial consequences. For one thing, auto insurance policies are more expensive after a lapse.
While you can cancel your policy any time you want, there may be cancellation fees. Further, some companies may charge you a short-rate fee, which is a percentage of the balance that you still owe on your previously agreed-upon premium. For example, many carriers have a 10% short-rate fee.
So, if all you want is month-to-month coverage and you can't find what you're looking for, get a six-month policy and cancel early. Sure, it will cost you a little extra money to cancel early, but you'll be fully covered until then.
Don't Auto Insurance Companies Reward Loyalty?
Maybe you're selling your car and have no plans to buy a new one. Maybe you're moving to the big city and basically giving up driving for a life of walking, riding the subway and jumping in cabs. No matter your particular situation, if you're a longtime customer in good standing, your auto insurer will no doubt throw you a couple of months of temporary car insurance after your, say, six-month policy expires.
But that scenario is the best-case scenario, and best-case scenarios are notoriously elusive. Ironically, your car insurance company no doubt prefers to emphasize worst-case scenarios. There are plenty of reasons why an unknowable future might beguile or thwart your carefully laid plans—that's why your agent will probably suggest you purchase a six-month policy! You'll cancel early if you must, you'll pay the cancellation fees, you'll be fine.
Temporary Car Insurance - Get the Cheapest Rates
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What About Renting a Car?
First of all, rental car companies cannot refuse to rent you a car if you refuse to buy auto insurance from them. In fact, all your car rental company's vehicles are insured by that car rental company. In truth, they want you to buy short-term auto insurance, but it's extra, or add-on, insurance that's not required by any law in any state.
If you decide to purchase this add-on coverage from your rental company, you can get collision damage waiver coverage, supplemental liability protection, personal accident insurance and personal effects coverage—all for about $30 a day. That amount is higher than the average market rate for those insurance products, but what price peace of mind?
Credit Cards Offer Temporary Insurance
Many credit-card companies offer short-term rental car coverage. If you are thinking about renting a car and you're an American Express, MasterCard or Visa member, you may be eligible for this type of temporary auto insurance. Since your rental car will still be insured by the rental car company for at least the state's required minimum liability coverage, ask your credit-card company about the add-on insurance it provides.
Of course, you should compare the difference in price and rental car insurance coverage between your credit-card company and your rental car company.
How Much Does Car Insurance Cost Per Month?
Car insurance prices vary from company to company. One factor that influences the price of car insurance is the location of the driver's residence. In states that require higher coverage, there is a higher car insurance cost. Of course, there are other factors that influence the price of car insurance such as how you store your car, the type of car you drive, etc.
According to the Insurance Information Institute, New Jersey has the highest average auto insurance rates, with an average cost of $109.11 per month. Idaho has the cheapest average car insurance rates, at an average cost of $49.98 a month. To find out which insurer offers the cheapest rates in your state, visit here.
A Great Alternative to Temporary Car Insurance
If you don't own a car but find yourself driving someone else's vehicle every so often on a fairly regular basis, you should consider a non-owner car insurance policy. This type of car insurance plan will cover your state-mandated minimum liability requirements, but it will cost much less because you don't own your own vehicle and you only drive infrequently.
If you buy non-owner car insurance, your state may also require you to purchase uninsured/underinsured motorist protection and medical payments or personal injury protection (PIP) The first insurance product reimburses your car coverage claim if an uninsured or underinsured driver causes damage to you or your car. The second product pays for your injuries after an accident, no matter who is held responsible.
And guess what? Non-owner auto insurance usually doesn't include a deductible—the agree-upon amount you pay after an accident before your car insurance coverage kicks in.
When Shopping for Temporary Car Insurance
As stated before, car insurance companies would much rather underwrite a six-month or 12-month policy. Unless we're talking about a rental car, your chances of snagging short-term or month-to-month car insurance is slim.
Remember, since you will be driving for only a short period of time, pay-by-the-month coverage automatically makes you a risky driver—it's a red flag to insurance companies. In the end, you'll get a better rate if you buy six months of car insurance as a low-risk driver than if you buy temporary car insurance as a high-risk driver, all things being equal.
SmartFinancial Knows Car Insurance
You will never be charged for SmartFinancial's real-time car insurance quotes for car insurance policies, no matter the policy type. Let SmartFinancial's licensed auto insurance pros map out for you the good points and the not-so-good points of purchasing a short-term insurance package as opposed to a six-month policy. You'll be glad you did!
Just enter your zip code or call 855-214-2291 to get started. SmartFinancial uses artificial intelligence, machine learning and its proprietary, data-slicing algorithms to find you the right policy at the right price.
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