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Temporary Car Insurance

Since car insurance, in some form, is mandatory in all 50 states, and since coverage requirements vary from state to state, it’s important for car owners to know where they stand with their policy on an annual basis. If conditions change in such a way as to affect the coverage of your policy, one option is to get temporary car insurance until things return to normal.

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The reasons for purchasing temporary car insurance, who might need it and the typical costs of coverage are reviewed below.

Reasons for Purchasing Temporary Car Insurance

One of the most common occurrences that create the need for temporary car insurance is an extended visit from out-of-town guests. Your guests that come in for a day or two and drive your car to a wedding, for instance, will most likely be covered under your normal policy. But if those guests stay for three months, and you give them exclusive or semi-exclusive use of your vehicle, they will probably need a separate policy.

You might think it’s a better idea to simply add these guests to your existing policy for the time they will be in town. Though it’s possible to do so, such a decision may cause two problems.

First, is the fact that your insurance carrier will most likely be unwilling to give you anything less than six-month coverage. If your guests are only staying for three months, you’ll paying paying for time you don’t need.

Second, and more importantly, is the effect an accident will have on your auto insurance. Accident claims usually cause premiums to go up. If one of your guests has an accident while covered on your policy, your rates go up even after he goes home.

With a temporary car insurance policy, your regular policy us unaffected by the actions of your guests.

Other reasons for purchasing temporary car insurance, among those who already have regular policies, include borrowing a car while yours undergoes long-term repairs, purchasing a cheap, used car for a temporary, out-of-town work assignment, or loaning your student a car while he’s away at school.

Temporary Car Insurance for Non-Owners

People who live in large cities with public transport may not own their own car. You may be a resident of Chicago with access to trains, buses, and taxis to meet all of your transportation needs within the city. But what if you want to drive down to Nashville for a two-week visit with your sister? If you choose to rent a car, you’ll need to be insured for the rental period.

Car owners are covered by their own policies for rentals in most cases. But, since you don’t own a car, you must purchase temporary insurance from someone. The coverage offered by the rental company is on option; a temporary car insurance policy from a reputable insurance company is a better one. It will cost less and cover more.

The Cost of Temporary Car Insurance

The first thing you need to know about the cost of temporary car insurance is that it’s higher than standard insurance when measured on a per-day basis. The convenience of the policy, combined with the higher risk/return ratio the insurance company takes on, makes a higher premium necessary. The good news is that the policy will still have the proper amounts of coverage for the state you’ll be driving in. Consider these facts:

Rates vary by policy, but finding a minimum liability policy starting around $19 or $20 per month is fairly common. You probably won’t be able to find a shorter term through a normal car insurance company, with the possible exception of a policy for a rental. Such policies average $10 to $15 per day.

The risk to the insurer on temporary car insurance policies is relatively high, and because of their short term nature, they don’t generate a lot of return on investment for the company. Therefore, they make their money by charging a fee for establishing a temporary policy. The fee generally hovers around $50 per insurance period.

If you purchase a one-month policy for an out-of-town guest who ends up staying an extra month, you pay the premium plus a second fee to extend the policy. That makes it important for you to make sure you have the right amount of coverage so you don’t pay the fee more than once.

Temporary car insurance can be a bit more expensive per-day than an extended policy, but sometimes circumstances dictate that purchasing one is a wise decision. Next time you have a short-term driving need, consider temporary insurance.

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