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If you need car insurance by the month, you might be disappointed to know that most companies don’t offer this option. However, temporary insurance might give you the exact coverage you need.
Does Month-to-Month Car Insurance Exist?
Almost all states require car insurance even if you drive for just a few days. When you sign up for car insurance, you might feel completely overwhelmed. Even if your insurer offers a monthly payment schedule, you usually must choose between a six- or 12-month contract. You might wonder if you can pay on a month-by-month basis.
The short answer is that you typically cannot pay this way. Temporary car insurance is rare, although there are certain instances when month-to-month insurance makes sense. Even though it’s unlikely that you’ll find this option, it doesn’t mean you can’t find cheap insurance quotes.
Temporary insurance gives coverage for up to 28 days. The policy gives you the same coverage as you would find with an annual policy, but you only pay for it when you need it.
As mentioned, this type of insurance is hard to find. Insurers that claim to offer month-to-month policies leave out expensive stipulations. They know consumers want to save money instead of agreeing to a long contract. The shortest policy you will receive is usually a six-month one, which you will need to cancel if you want coverage for less time than that.
You do have options for more temporary car insurance, including the following:
- Rental company car insurance
- Six-month insurance contracts without cancelation fees
- Including a new vehicle onto an existing policy for a short time
- Discounted insurance for military members and students
Usage-based insurance is also available if you don’t drive frequently, which lets you only pay for the amount you drive. Ride-share insurance is another option if you drive for Lyft, Uber, or DoorDash.
Why Would You Need Temporary Insurance?
Although there might be a multitude of reasons you need temporary car insurance, here are some of the more common ones:
- You recently moved and need insurance but want to shop around before selecting one.
- You plan to resell a vehicle shortly after purchasing it but need to drive it for a bit.
- You have a college student who only drives during winter or summer breaks. According to ValuePenguin, removing your college-aged driver from your policy during the semester can reduce your rates by $1000 to $2500 annually. Just don’t forget to place them back on during breaks.
- You need to add someone temporarily to your insurance such as a relative, friend, or babysitter. These people would regularly drive your vehicle and not just a one-time event.
- You need temporary insurance for a rental vehicle. Before you sign up for this, make sure your own policy doesn’t include sufficient coverage for rental vehicles or even your credit card. However, some policies don’t cover rentals used for business, so if you’re on a work trip, you might need to purchase temporary coverage from the rental company.
- You need short-term international coverage. If you plan to drive to Mexico or Canada, you might need temporary international coverage. Check with your insurer to make sure you’re not already covered, though.
- You need to put your vehicle in storage. Even when you aren’t driving your vehicle, it remains a risk for damage or theft and comprehensive coverage would protect your vehicle.
Why Do Insurers Offer Longer Terms?
Setting up car insurance policies take quite a bit of time, and in many instances, it doesn’t make sense for insurers to spend this much time on such an in-depth process if you only need coverage for a short time.
The underwriting period takes the longest time, and that’s when the insurer analyzes the risks of insuring you and your vehicle. Companies use several factors, such as your age, driving record, location, credit history, and vehicle details to determine your rate.
From there, most insurers offer two different term lengths for their policies: six or 12 months. Those who want shorter times aren’t as likely to renew, so insurers don’t view them as perfect customers. The premium the insurer gets from a short-term policy isn’t worth all the administrative costs.
Even though you cannot purchase car insurance by the month, you can pay for it on a month-by-month basis. You can also prepay the full amount upfront.
If you need to cancel your coverage, move to a ZIP code that has lower rates, want to change your plan, or sell your vehicle, most insurers offer refunds. They also don’t typically charge cancellation fees and might refund any unearned premiums.
What Are Some Downsides to Short-Term Insurance?
If temporary insurance sounds like it would be a good fit for your needs, you should be aware that there it involves several risks. While it depends on the company, most insurers require that you make a payment worth approximately 30 to 45 days of the premium. If you end up canceling five days into the policy period, you might not receive the entire amount in return. Also, certain insurance companies might charge cancellation fees if you end your policy before it expires.
If you’re financing or leasing a vehicle, you might be mandated by your lender to have state-minimum coverage as well as collision and comprehensive coverage. You cannot carry these in a temporary capacity. If your lender finds that you’re operating the vehicle without insurance, you might have your license suspended and vehicle repossessed.
Many insurers will ask if you had at least six months of continuous coverage before taking you on as a customer. They do this to determine your risk level. If you weren’t insured, the company might believe that you were driving without insurance, and according to The Zebra, could increase your premium by about $90 for a six-month policy.
When considering short-term or temporary car insurance, keep in mind that most insurers only offer a six- or 12-month policy. However, if you need coverage for a short amount of time, some insurance companies offer this option. Make sure you shop around to determine you’re getting the best rates for the type of coverage you need.
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