Imagine you and your best friend are about to go on an epic road trip from the East Coast all the way to Mexico City. Your friend has volunteered her car for the trip and you’ve made plans to take turns driving. Before you leave, you both want to make sure your auto insurance policies are on the up and up.
Do you need special coverage to drive her car? Does she need extra coverage for you? Is her insurance policy good in Mexico? Is temporary car insurance the way to go?
I'm here to help unscramble the confusion around temporary car insurance so you can enjoy a trip to the grocery store or to Mexico City with peace of mind!
What Is Temporary Car Insurance?
Temporary car insurance is an insurance policy that covers a vehicle you’ll only drive for a short period of time, usually six months or less. But the thing is, these types of policies don’t actually exist—at least not from reputable insurance companies. The one exception is rental car policies (I’ll discuss those below).
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But if you only need car insurance for a few days or months, you’re not totally out of luck. There are a few ways you can get around having to buy a six-month, full coverage policy—and it’s easier than you think. Let’s take a look!
Insurance Options to Cover Temporary Situations
Borrowing a friend’s car for the week while yours is in the shop, buying a car you know you’re only going to have for a few months, renting a car—who knew there were so many scenarios where temporary car insurance could come in handy! Here are a few situations to consider.
Non-Owner Car Insurance
Non-owner car insurance is a type of policy that provides coverage when you don’t own a car but still need insurance. Technically, this isn’t temporary car insurance because you’ll still need to purchase a six- or 12-month plan. But it does cover you when you’re using someone else’s car temporarily. When could that happen? Well, maybe you travel several days or weeks a month and use a lot of rental cars. Or maybe you need to borrow a family member’s vehicle for two months. In these instances, non-owner car insurance could be the best way to go because it’s less expensive than regular coverage.
An important thing to remember about non-owner car insurance is that it typically only provides liability coverage. This type of coverage protects you if you cause bodily injury or property damage to someone else or their vehicle. Auto insurance follows you, not the car. So whether you’re driving your mom’s car, a rental car or something else, you’re covered.
Rental Car Insurance
When it comes to temporary car insurance for rental cars, you’ve got options. Like I mentioned earlier, you could choose to get a non-owner car insurance policy if you don’t own a car but use rental cars frequently. But if you do own a car, it’s likely your current auto policy will cover the use of a rental. So if you got into an accident driving a rental, your existing coverage would also apply to the rental car. (Again, auto insurance follows you, not the car.)
If you’ve ever rented a car before, you know you’re going to get a sales pitch on buying rental car insurance from the rental company. Rental car insurance purchased directly from a rental company can be expensive, and if you already own your own vehicle, it’s probably not necessary.
Depending on their policy, a rental company’s insurance might limit coverage, which could leave you still on the hook for damages. But it’s possible you could secure a lower deductible—the amount you pay before coverage kicks in—with a rental policy than your own personal one. You might also be able to purchase higher coverage limits if you’re feeling uneasy about a dangerous or unfamiliar area you may be driving in or through. Finally, if you don’t carry comprehensive or collision insurance on your own personal vehicle, you could add it to a rental car policy just to be on the safe side. That way, if the car was damaged or destroyed, you’d have coverage.
Many credit cards, especially those that charge an annual fee, include rental car coverage as part of their service. Now, to be clear, I do not recommend using a credit card for a rental car just to get the insurance coverage. In fact, I don’t recommend using a credit card ever, for anything!
In most cases, rental car insurance isn’t necessary. Whatever you decide to do, call your insurance company before you rent a car and find out what your coverage looks like.
Adjusting Current Coverage
So we’ve talked about non-owner car insurance and rental car insurance, but what about modifying your existing auto policy for everything else? Let’s dive into some different scenarios where adjusting your current coverage might be a good idea.
1. For family members who borrow your car. Many insurance companies will require anyone of legal driving age living in your home to be listed on your auto policy. This automatically ensures (and insures) that a spouse and any children with a driver’s license are covered without having to set up special policies for each person in order to drive your vehicle. In fact, with a lot of companies, you have to specifically exclude someone in your immediate family in order for them not to be covered by your policy. Remember, adding additional drivers may increase your rates, so talk to an insurance agent before signing on the dotted line.
2. When a nonfamily member borrows your car. There’s this thing baked into most auto insurance policies called “permissive driver.” Basically, if someone has your permission to drive your car, they’re covered by your car insurance. But if this is turning out to be a more frequent or long-term arrangement rather than a few days or weeks, your insurance company may want to see them listed as an additional driver on the policy.
3. For student drivers in your household. If you have kids who go off to college and only return home for school breaks, you might be able to update your policy. They’ll still be covered when they’re home and driving and you could get a discount.
Some other times you might need unique insurance coverage is if you’re planning on buying a car and reselling it soon after, if you’re driving to Canada or Mexico, or if you’re in between cars and borrowing a car from one or more people in the meantime. Whatever the situation, make sure to check in with an insurance agent you can trust.
How to Purchase Temporary Car Insurance
Now that we’ve run through a bunch of different scenarios, the next question is, “How do I purchase temporary car insurance?” Well, you kinda don’t. Remember earlier when I said that most U.S. auto insurance companies only write policies for six-month or one-year blocks at a time? Reputable insurance companies aren’t in the business of writing short-term policies for a couple of days or a few weeks.
Our recommendation is first to see what your current policy covers. A lot more is covered than you probably realize, especially if you’re working with a solid and trustworthy insurance company. And second, you always have the option of buying a non-owner policy if you don’t have current car insurance but still plan to be driving other people’s vehicles. But just going out and buying five days’ worth of car insurance? Yeah, not really gonna happen.
The Right Car Insurance Policy for You
Whether you’re looking for temporary car insurance or something for the long haul, you want to work with someone you can trust. But buying car insurance and shopping rates for the best coverage can be overwhelming and confusing. (No thanks!) Instead, connect with one of Ramsey’s Endorsed Local Providers (ELPs). These insurance agents would love to help you find the best policy for your needs. The right plan not only protects you and your loved ones, but it can also save you money and help you reach your financial goals sooner!