Car insurance is almost always on top of the list among the many investments a person can make. After all, it allows you to minimize or, in some cases, completely prevent the financial repercussions of a car accident. The best-case scenario is you saving hundreds of thousands of dollars from medical bills, lost wages, and car repairs. In the worst-case scenario, you spend USD$1,500.00 a year for nothing. In short, it’s a low-probability, high rewards investment.
Of course, if you don’t necessarily drive too often, the probability of reaping the rewards of the car insurance becomes even lower. Thankfully, short-term car insurance policies exist.
Short-term car insurance, also known as temporary insurance, is an insurance policy that has a significantly shorter coverage length than regular insurance. Its shorter length opens up advantages and disadvantages that you usually wouldn’t find and enjoy with regular car insurance policies. With that said, here’s a look at those pros and cons.
Pros
- It’s Cheaper In The Short Run
One of the main problems with regular car insurance is that you can only get the package if you purchase a whole year’s worth of insurance. That means if you only need the insurance for three months, you have no choice but to pay for the annual package which, on average, costs USD$1,800.00 a year. So, you’re essentially getting 3 months’ worth of insurance for the price of 12. Short-term car insurance is the perfect solution for this problem due to its length.
Short-term car insurance comes in monthly, weekly, and daily packages. In some cases, like GoShorty’s temporary car insurance, the coverage length may even be as short as an hour.
As there are much lower increments in the possible packages you can get, it’s relatively easier to pay for just the exact amount of insurance for your purposes. As a result, you can save money in the short run. If you only need insurance for one month, for example, you can get it at a price of USD$180.00—the average rate of short-term insurance—rather than USD$1,800.00.
- The Application Process Is Faster
Applying for car insurance is relatively straightforward. You have to fill out a form with your personal information, provide the necessary documents, and wait for the provider’s response.
That applies to both long- and short-term car insurance. However, the main difference lies in how long it takes to receive a response. In the case of regular car insurance providers, they take several hours to confirm your documents. They’re also likely working on a ton of applications, which may affect their speed. On the other hand, short-term car insurance providers respond more quickly, as it takes, at most, several minutes. This speed can be attributed to a lot of things.
Perhaps it’s because the stakes are lower due to the lower price. Maybe short-term insurance providers don’t receive as many applications. Nonetheless, the process should generally be faster compared with regular car insurance companies.
Cons
- Not As Flexible As Regular Insurance Policies
When you’re applying for regular car insurance, you’re typically given the ability to modify its coverage. For example, if you’re self-employed, it’s best to exclude lost wages from the coverage plan. Doing so reduces the overall price of the insurance policy. If you aren’t aware, the cost typically depends on numerous factors, one of which is insurance coverage.
Unfortunately, that’s not a luxury you can have if you opt for short-term car insurance. Most packages have fixed coverage, so you wouldn’t be able to change the terms.
- It’ll Cost You More In The Long Run
As stated earlier, a year’s worth of regular car insurance costs around USD$1,800.00. So, while you have to pay that whole amount eventually, the monthly cost is at USD$150.00.
Meanwhile, short-term car insurance costs USD$180.00 a month on average. In short, the cost per month of short-term insurance policies is slightly higher than the cost per month of regular insurance policies. So, if you were to rely on short-term car insurance for over 10 months, you’re already generating a net loss as opposed to when you rely on regular insurance.
Parting Words
Keep in mind that the pros and cons mentioned in this guide aren’t invariable. There’ll always be outliers that often contradict the general consensus concerning the pros and cons of short-term car insurance. Certain companies may allow for some flexibility in the coverage. That’s why you must take your time choosing the right agency for short-term car insurance.
