Short Term Car Insurance Explained

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Written by Rayna Opoku Edited by Quiana Darden Reviewed by Amanda Clear

Updated January 4, 2023

Standard car insurance policies usually range anywhere from 6 to 12 months. But, some drivers may seek a more short-term solution to secure coverage and avoid driving without insurance. 

If you’re someone who doesn’t need a traditional car insurance policy, perhaps short-term car insurance is the right choice for you. 

Key Takeaways:

• Car insurance policies with terms for less than six months are referred to as short-term car insurance, often known as temporary car insurance.
• You should consider short-term car insurance if you borrow or someone borrows your car regularly, you’re renting a car, placing your vehicle in storage, or being deployed by the military.
• If you can’t find a short term car insurance policy you might be able to purchase a standard policy with a monthly payment option and cancel it when you no longer need it. 

What is Short-Term Car Insurance? 

Short-term car insurance, also known as temporary car insurance, refers to auto policies shorter than the typical six-month to a year. If you’re renting a car or borrowing someone else’s car for a trip, short-term car insurance may be worth looking into in case of an unexpected accident. 

Most major insurance companies don’t specifically offer temporary car insurance. However, some offer policies with varying terms that you can cancel once you no longer need coverage. However, beware of fake car insurance companies that claim to provide cheap short-term auto insurance. Some ads may try to entice you by offering seven-day or 30-day policies but may only be able to provide you with a minimum of six months. 

When Do You Need Short-Term Car Insurance?

Not everyone needs short-term car insurance, but here are a few situations when it could be beneficial. 

You’re Temporarily Adding Someone to Your Car Insurance

If a friend or family member borrows your car once in a blue moon, they will likely be covered by your policy. However, if someone is going to borrow your vehicle regularly, you may want to add them to your insurance. While this may increase your rates, you can take them off the policy once they stop using your car. 

You Need a Temporary Car Insurance Policy for a Rental 

The rental insurance company will typically provide drivers insurance coverage when renting a car. If no insurance is provided or you’re planning to rent a car for an extended period, temporary car insurance may be a good fit. Before you purchase a new policy, though, be sure to check with your insurer first to see if they may be able to provide some alternative coverage for you.

You’re Placing a Car in Storage 

If you’re putting your vehicle in storage for a few months because you won’t be driving it, you still want some kind of coverage. Your state may require insurance on your vehicle because it’s still at risk for theft or damage. Most insurance companies offer a policy that covers your car for non-accident incidents. 

You’re a College Student Drive During Semester Breaks 

If you’re a college student who only drives a few weeks or months out of the year, paying for auto insurance year-round doesn’t make sense. However, some car insurance companies require that all licensed household members be listed on the policy. 

Some car insurance providers offer discounts to encourage drivers to keep their young drivers on the policy year-round.  This is often referred to as a distant student credit and typically applies if the student moves over 100 miles from home without a vehicle.

You’re in the Military and Don’t Drive While Deployed 

Most auto insurers offer discounts for military members and veterans, but paying for a policy while deployed can be a waste of money. 

You can maintain car insurance for your vehicle while deployed, but reduce coverage to comprehensive only if allowed. This would indicate to your insurer that your vehicle is in storage so it won’t need liability or collision coverage. Doing so will greatly reduce the rate of the policy while maintaining enough coverage to satisfy the DMV and ensure your coverage doesn’t lapse. 

The only exception is if your vehicle has a loan or lease on it. In this case you can’t reduce or suspend coverage.

You Borrow Your Friend’s Car Often

Most drivers won’t need additional insurance to borrow their friend’s car. However, if you regularly borrow your friend’s car or you’re considered a high-risk driver, you might need to purchase your own insurance. In this case, the insurance you buy to drive your friend’s vehicle would be secondary if you’re in an accident. Your friend’s insurance policy would have to be exhausted before yours kicks in.

How to Get a Short-Term Policy 

A standard insurance policy period is 6-to-12 months. The simplest way to have short-term car insurance is to pay monthly for a standard policy and then cancel it when you no longer need coverage. Keep in mind that you may have to pay an early cancellation fee. 

You could also pay in total upfront, which may qualify you for a discount, and request a refund after you cancel. Just because you request a refund doesn’t mean you’ll get all your money back, and it depends on the policy, so check with your insurance company first. 

Alternatives to a Short-Term Car Insurance Policy

Even if you’re in the market for temporary car insurance, you might still be on the fence about whether or not short-term car insurance is right for your situation. Or you may want to avoid the stress of making sure that you cancel your policy on time. If you fall into one of these categories, you can consider some other options. 

Non-Owners Car Insurance

If you don’t own a vehicle and often borrow other people’s cars, non-owner car insurance may be a policy worth looking into. Non-owner car insurance offers liability coverage for bodily injuries and property damage when borrowing or renting a vehicle. However, this only happens when the primary policy on the vehicle is exhausted. In addition, non-owner insurance provides extra coverage to drivers using a ride-sharing service. However, this policy has limits to what it will cover. 

For example, it usually won’t pay for damages to the car you’re driving or cover roadside assistance costs. It also can be hard to obtain this policy as not every company offers it.

Rental Car Insurance 

Most companies offer rental car insurance. In addition, some rental companies may provide you with a loss damage waiver or a collision damage waiver if you don’t have insurance and need to rent a car. 

This will remove some liability you’d have for paying for damages to the rental car. However, if you already own auto insurance, you can likely adjust your existing policy to cover your rental car. 

Permissive Driver Clause 

A permissive driver is a licensed driver that doesn’t live at your address and has your permission to drive your car. For example, let’s say you have a friend staying at your house for the weekend, and they ask to borrow your car for a quick errand and bring it back unscathed. This would fall under permissive use. 

Permissive drivers are covered under most standard car insurance policies. They will extend your collision, comprehensive, and liability coverage to them. In the case of an accident, your coverage should cover the costs based on your current policy limits. 

However, some companies do not include permissive use in their policies. In that case, you could look into a named driver policy. A named driver policy is a specific list of drivers on the auto policy that would be covered. This allows your insurer to be aware of the additional driver’s risks and may increase your rates. 

However, if you have a named driver insurance policy, and the person you allow to drive your car is unlisted, they won’t be covered if they’re in a collision.  You’ll need to pay out of pocket for any repairs, bodily injury, or property damage. 

Usage-Based Car Insurance

Usage-Based Car Insurance is an auto insurance policy that bases your rates on your driving habits and behaviors. Insurance companies will track your driving behaviors, such as speeding, harsh braking, and even mileage. Then, they adjust your rates based on how well or risky you drive. 

A pay-per-mile policy calculates your insurance rate based on how much you drive. Your insurance company gives you a base rate for coverage and a mile rate for each mile driven. 

This can be beneficial if you’re not on the road much. Since insurance companies are looking at your total driver profile, you shouldn’t pay as much because you drive less than average. 

This is a good alternative if you only need coverage a few days out of the month or if you’re a college student who uses public transportation as your primary mode.

Best Companies for Short-Term Car Insurance 

To help you on your hunt for short-term car insurance, we’ve compiled a list of some of the best options on the market. 

GEICO

As one of the biggest names in auto insurance, it’s no surprise that GEICO is one of the top choices for temporary car insurance. They also offer discounts for drivers with multiple vehicles in all 50 states. 

Progressive 

Progressive is known for providing an abundance of car insurance discounts to its drivers. You can also get a quote with them online, over the phone, or via an online comparison tool.

Nationwide

Nationwide is an excellent choice for short-term auto insurance because it doesn’t charge cancellation fees. The company also offers drivers an online estimator tool, so you can quickly see how much one month of coverage will cost you. 

Allstate 

Allstate offers an excellent alternative for drivers looking for temporary car insurance. The pay-as-you-go insurance plan gives you the same levels of coverage and customer support as standard plans, but you only need to pay for the miles you drive. Allstate’s program Milewise has a daily mile rate for low-mileage drivers who don’t spend much time on the road. 

USAA

Geared towards military drivers and veterans, USAA is known for offering great discounts and plans for those on active and retired duty. It provides great comprehensive coverage and customer service. 

No matter what company you choose for short-term auto insurance, you want to compare rates to get the best deal. 

A car insurance comparison tool like our auto insurance calculator can help you see premiums from dozens of companies within minutes based on your driving background and needs. 

While these are some of the best short-term car insurance companies on the market, it’s still a good idea to compare auto insurance quotes. Our auto insurance calculator helps you compare car insurance quotes from over 65 top insurance companies within minutes. Just enter your zip code below to get started.

Pros and Cons of Short-Term Car Insurance

Short-term car insurance is a good idea for some drivers because it can be a flexible way to maintain coverage without committing to an auto insurance company. However, here are some pros and cons to consider before you make a decision. 

Pros 

• Month-to-month payments: Short-term coverage could be perfect for your situation if you need a policy for six months or less. While paying in total upfront may get you a discount, it may not be within your budget. Paying month-to-month might be more affordable and make it easier to cancel once you no longer need coverage. 
• No cancellation fees: No one likes hidden costs, especially with auto insurance payments. Some insurance companies will offer you a six-month policy without a cancellation fee, on top of discounts that allow you to save more. Keep in mind some insurance companies do charge cancellation fees, though. So, do your research to ensure you find one that doesn’t.  

Cons 

• Difficult to find reliable short-term auto insurance: Drivers struggle to find actual short-term auto insurance. Many companies offer alternatives or are only looking to scam unsuspecting drivers. If you do find temporary car insurance, you’ll need to carefully read the terms to see what coverage is included and what isn’t. 
• Limited coverage: Some temporary auto insurance policies provide limited coverage options to drivers and their vehicles. For example, non-owner car insurance only provides liability insurance for the driver, not your vehicle. Other rental car policies don’t offer full coverage, either. Each driver must determine how much coverage they need to fully protect themselves and their assets. 
• Temporary car insurance can cause a lapse in auto insurance: Auto insurance companies usually look at your insurance history when calculating your premium. A lapse in auto insurance from temporary car insurance could make it harder for you to secure affordable auto insurance in the future. 

What to Consider When Purchasing Short-term Insurance

Drivers considering temporary car insurance must keep a few things in mind during their search. Here are a few tips for shopping smart and getting the best deal on your short-term insurance plan. 

Inquire About Insurance Cancellation Fees

Always ask your insurance agent about cancellation fees. While most auto insurance companies charge drivers a cancellation fee of 10%, it varies. As a result, some drivers may feel it’s worth paying a small price to avoid making more expensive payments. However, others may be unable to afford the cancellation fee, which puts them in a tricky situation. 

Weigh All Your Coverage Options 

Even though it’s tough to find real short-term car insurance, there are several alternatives to get coverage and avoid a lapse in your insurance history. To determine which choice is the best fit for you, weigh all your coverage options before starting your search for insurance. 

Look at the amount of coverage you’re getting and not the price alone. 

Contact your Insurance Agent 

Don’t underestimate the help your insurance agent can provide. Some insurance companies offer particular policies or discounts they don’t advertise to help save money without canceling your auto insurance policy. They might provide specific coverage for borrowed vehicles or vehicles placed in storage as well. 

Short-Term Car Insurance FAQs 

How does short-term car insurance work?

Short-term car insurance works very similarly to standard car insurance policies. However, instead of insuring a driver for 6 to 12 months, temporary auto insurance will cover you for a short period. This may be a period of a few weeks or months. 

Which companies offer short-term car insurance?

Some popular auto insurers that offer short-term car insurance are GEICO, Progressive, Nationwide, Allstate, and USAA. 

Can I get car insurance for only a month? 

Car insurance companies don’t offer month-to-month car insurance. However, some insurers may allow you to purchase car insurance coverage and cancel it once it reaches the one-month mark.                                                                                        

Rayna Opoku Auto Insurance Writer

Rayna Opoku is an expert content writer who has spent the last two years creating in-depth guides and articles for the auto insurance industry. With over four years of experience writing for various companies, she's able to make even the most complicated of concepts sound simple and straightforward. When she's not writing about car insurance, you can find her exploring the next Fintech trend, smashing birdies down the badminton court, or sipping a mocha at her favorite cafe.