A few weeks ago I met up with a friend who shared an unfortunate but all too familiar story. When he started the story with “So I let my cousin borrow my car for a few days”, I knew that it wouldn’t end well. Nevertheless, I listened to the end and like I suspected, his cousin totaled his car. Luckily his cousin didn’t get hurt. However, the cost of repairs exceeded the value of the car. Considering this a “total loss”, his insurer gave him a small settlement check. But since this wasn’t enough, he had no choice but to save for a new car.
We’ve heard this story before, right? Someone we know lets a friend or family member borrow their car only to regret it later. Or maybe this happened to you? Well, a simple solution is short term car insurance. It will save you from any potential headaches down the road.
Short Term Car Insurance
Short term car insurance or temporary car insurance is a flexible alternative to traditional annual car insurance. Coverage ranges from one day to a month and it applies to cars, vans, and motorhomes.
It covers drivers between the ages of 18-75.
When To Consider Short Term Car Insurance
Short term car insurance adds you to a temporary car insurance policy or allows you to cover someone else under a temporary policy. It’s beneficial when borrowing or lending a car. Whenever someone other than the owner or authorized driver plans to drive a car, consider getting temporary car insurance.
Short term car insurance can also cover learning drivers who only get behind the wheel a few times. Lots of families also get it for students who drive during the holidays or summer months.
Lastly, car enthusiasts who have a second car can get short term car insurance for weekends and special events. Remember whether you’re insuring a rental or your own car, always compare insurance rates by shopping for providers that offer the right coverage for your needs.
Short term car insurance offers many financial benefits. For starters, it’s usually more affordable to get short term car insurance than to modify your annual policy because you only pay for the amount of time you need coverage.
And most times, short term car insurance offers the same coverage as long-term car insurance. Duration is the only difference.
Long-term car insurance is for a year while short term car insurance is for however long you’d like (as long as it’s under a month). With short term car insurance, there’s also no long-term contract. So once your policy ends, that’s it. You can let it expire or renew it.
If you decide to add another person to your existing long-term insurance policy, you could jeopardize your no-claim discount. Policyholders who do not make claims are considered less risky drivers and so insurers offer a significant discount. But if someone drives your car and gets into an accident, you lose your discount and your premium skyrockets! Without the no-claim discount, you can see as much as a 75% spike in your premium.
Making a claim on a short term insurance policy safeguards your premium. You never have to worry about next year’s premium going up because there’s no impact.
How It Works
Essentially your temporary car insurance is a separate policy. It doesn’t interfere with your existing annual car insurance.
Temporary car insurance is generally easy to set up and requires less information than long-term insurance. You’ll likely only need a name, address and driver’s license. As well as driving history, vehicle details, the effective date and coverage period. Once you sign up, your policy is effective immediately.
As with long-term car insurance coverage, always shop around for the best rates with an insurer like Day Insure. And make sure you’re comparing apples to apples – similar coverage and duration.
All in all, with short term car insurance, all of your bases are covered. It’s an affordable option that offers you (and other drivers under your policy) the peace of mind to drive hassle-free.
Danielle is a travel finance strategist, writer, speaker and podcaster. She paid off $63,000 of student loan debt in 4 years, bought a house at 27 and has traveled to 26 countries. She refuses to let her financial responsibilities hold her back from living life on her own terms.