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Can I buy short-term car insurance?

Can I buy short-term car insurance?

A short-term car insurance policy may be preferable if you don’t need to drive often or will only have the car for a short time. You’ll need to remember to renew the policy if your driving habits are changing. Insurers may charge you more for a short-term policy, or try to convince you to buy a standard annual car insurance policy.

One alternative to a short-term car insurance policy may be to buy a ‘pay as you drive’ car insurance policy. You can opt for this policy if you don’t find a short-term policy or don’t want to pay the extra costs but you don’t plan to drive long distances.

Can I get short-term car insurance for 2 months?

Most Australian insurers may not offer you a car insurance policy that runs for only two months. You may, however, be able to buy a standard policy, pay monthly and renew it after the first month.

If you opt to do this, you should check whether the insurer is quoting a significantly higher premium when paying monthly. You can usually expect a discount when you buy and pay for an annual policy upfront, which isn’t generally available if you are paying a monthly premium. Insurers may include extra administration fees in the premium for a short-term car insurance policy.

Alternatively, you can simply buy a standard car insurance policy for one year and cancel after the second month. This may be more convenient if you buy a policy that offers a free cancellation. Also, since insurers will have to refund the unused part of the premium, you don’t have to worry about losing money after paying for the annual premium upfront. This allows you to take advantage of the discounted rate offered by the insurer for making an annual payment. Make sure to confirm with the insurer that you can cancel mid-policy without incurring any additional charges before purchasing the policy. 

Can I insure a car for a week?

If you need to borrow someone else’s car or are going on a road trip, you should plan to buy short-term car insurance, even if it’s just for a week or less. If you don’t have car insurance with your name on it, whether you’ve been added to the current policy on the car or get your own short-term policy, you could be in for some bills.

Suppose you have to file a claim under these circumstances. In this case, you may have to pay an additional excess or your share of the out-of-pocket expenses for treatment or damages.  However, insurers don’t usually let you buy insurance for a week, which means you may have to pay the premium for at least a fortnight, if not a month.

How much does short-term car insurance cost?

In general, a short-term car insurance policy will probably cost you more, over the year, than if you bought and paid for an annual car insurance policy. If the insurer doesn’t charge cancellation fees, it may be cheaper to pay the premium for a year and request a refund when you cancel. You can search online for a short-term car insurance comparison to check if you qualify for the discounts offered by various insurers. Insurers may offer discounts on your premium if you buy the policy online, or if you have another insurance policy with them already, such as home insurance. 

You can also explore if buying a ‘pay as you drive’ policy will save you money on the premium. Insurance providers who offer this policy will ask you to pay a premium based on the distance you drive rather than for a length of time. The catch here is that if you drive your car a lot, your premium can be significantly high and you may end up spending much more on the policy than expected.

Should I buy short-term car insurance for a rental car?

If you’re only planning to drive for a few days, you may consider renting a car which comes with its own fees and charges. Even if you do rent a car, you’ll still need to buy insurance that covers the period that you’re renting the vehicle. You may have to buy a weekly or fortnightly rental car insurance policy before renting the car. This may be a preferable and cheaper option as the alternative is to buy the rental agency’s default policy which can often be more costly. 

The terms of car rental insurance policies often require you to pay a much higher excess, or much more out-of-pocket, than a standard car insurance policy.  You can buy a no-excess insurance policy for a rental car, but this may cost significantly more. Some insurers may offer you car rental excess insurance. This is a policy covering the excess you need to pay to the rental car company if the car is damaged or stolen. This means you may need to buy two short-term insurance policies when renting a car.

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This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.



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