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If you only intend to drive a vehicle for a short period of time, is there any point in paying full price for a regular car insurance policy?
Whether you’re just borrowing a car, driving a rental for a few weeks, or are planning to sell your vehicle sometime soon, you may want to look for a policy that offers just enough coverage without the full scope of a typical auto insurance policy.
In this article, we’ll discuss temporary car insurance, which is designed to provide coverage while you’re on the road but only for the short term.
As the name suggests, temporary car insurance offers coverage over the short-term and is not meant to last for the long haul. Instead, this type of policy provides motorists with an auto insurance policy for a temporary amount of time. Term lengths vary from anywhere between a few weeks to up to 6 months.
Temporary car insurance offers short-term protection against any damage or injury if you’re in an accident. This applies to a car you own, rented, or borrowed for someone else. You can specify exactly what type of coverage is required and the specific number of days that you will need it.
There may be a couple of reasons why you would opt for a short-term auto insurance policy as opposed to a traditional plan:
If you’re visiting Canada on an extended holiday, then you may find it more affordable to buy a car instead of a rental vehicle. In this case, you’d need insurance, but not for any longer than a few months for the duration of your stay.
When ownership of a vehicle is in the transition phase of being transferred from the current owner to a new owner, a short-term license plate may be used. In this situation, a temporary insurance policy may offer coverage for the short-term licence plate until the full plate is registered.
If your friend or a family member is lending their vehicle to you, you may still need to take out your own policy temporarily instead of driving under their ownership and policy. In this case, a temporary auto insurance policy may be required.
If you only plan to keep the car you just bought for a short amount of time, then a temporary policy may be appropriate.
Short-term auto insurance typically costs more than a regular car insurance policy. That said, the cost will depend on a variety of factors, such as the make and model of the car, how far you plan to drive it, where you intend to drive it, and other factors.
If you are planning to take out a policy for just a few days, then a temporary policy will be both more flexible and cost-effective than an annual policy. But if you plan to drive the vehicle for a few months (but less than 6), then you may find it more affordable to take out an annual policy and cancel it when it’s no longer required. Just be wary of the cancellation fees that may accompany early cancellation.
There are varying degrees of temporary car insurance that you can choose from based on your exact needs:
Believe it or not, but you may have the option to take out a policy that only lasts one day, though these cases are rare. Some insurance providers may offer this type of short-term, on-demand auto insurance if you need it.
This type of temporary auto insurance may be taken out in cases where you are borrowing a friend’s vehicle and need your own policy for a short time.
Again, this type of insurance is designed to be temporary in nature and provides coverage for up to one month in cases where a permanent policy is not required.
There may be more flexible and easily-accessible short-term policies that you may want to consider as opposed to a temporary auto insurance policy, such as the following:
Some insurers offer a “pay-as-you-drive” policy whereby you’ll be covered under a comprehensive plan but will only have to pay for the distance you drive.
Find a car insurance policy that allows you to pay monthly premiums as opposed to annual premiums. That way you can cancel the policy when you don’t need coverage anymore. If you go with this option, look for an insurance provider who doesn’t charge cancellation fees.
If you’re borrowing a car for a short period of time, ask the owner if they would be open to listing your name as a driver on their insurance policy.
You could rent a car and buy auto insurance through the rental company, though this may be a more expensive option.
Temporary car insurance is available in most provinces across Canada, except Ontario. The laws surrounding car insurance in Ontario are pretty strict. Even in provinces where it is available, not all insurance providers will offer it.
You may choose to take out a 1-year policy and then cancel some time before the expiry date, though you will be charged a cancellation fee for terminating the policy before it expires.
To find a temporary car insurance policy, you may call various insurance providers directly, work with an insurance broker who can help find a policy on your behalf, or deal with an online insurance aggregate to help compare insurers and policy rates.
If you only plan to drive your car for a short period of time, temporary auto insurance can be a great way to ensure coverage while you’re on the road without having to pay the full price tag on a traditional policy. That said, this type of insurance can be tough to find. You may want to speak with an insurance broker to help you find an insurer who can offer you what you need.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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