Temporary (Short-term) Car Insurance & Monthly Plans

When you think of insurance covers, it reminds you of long-term commitments with tenure ranging from a one, three or even five years in some cases. This is true in most cases of general insurance covers. The vehicle insurance industry although perceived to be rigid with timelines and the features, but it is far from truth. Modern era insurance has witnessed innovative products being introduced that are dynamic in nature. You have the choice to select the product that fits you the best. One such upcoming product is the short-term car insurance. Although in its nascent stage, the Indian insurance sector have a few insurance companies that offer these short-term car insurance plans. Since it is a niche concept, not much people are aware of it. Let us learn more about it:

What is Short-Term Car Insurance?

As the name suggests, a short-term car insurance is an insurance plan for a temporary duration. Since the concept of this policy thrives on the time duration, it can be as low as few minutes extending up to a couple of months. Someone who is not looking to drive the car for the entire duration of a year, which is a minimum for a standard car insurance policy, can purchase this type of insurance. You can purchase this form of car insurance online or offline, depending on the availability from your preferred insurance company.

How does Temporary Car Insurance Work?

When you buy a standard car insurance online, it is available in one of two types - comprehensive and third-party. Comprehensive plans can be loaded with add-ons to offer customised coverage depending on your requirement. On the contrary, a third-party car insurance is the minimum requirement for car owners prescribed by the Motor Vehicles Act, 1988. A temporary car insurance comes into picture where the insurance requirements are limited and time bound. You need to have a strong reason to purchase a short-term car insurance. For instance, relocating to a different city, first-time car learner, rented car are some examples where such a monthly car insurance can be the right fit. In these situations, buying a long-term coverage may not make much sense since the coverage will not be required for the majority part of the policy tenure.

Benefits of Short-Term Car Insurance Coverage

Short-term car insurance offers flexible and affordable coverage options tailored to your needs. You can opt for coverage for durations such as 1 month, 6 months, or 9 months, and typically pay a lower monthly premium compared to long-term policies. Here are the benefits of short-term car insurance:

1. Instant Coverage: Get immediate protection when you need it.
2. Third-Party Injury Coverage: Protection against third-party injuries caused by your vehicle.
3. Third-Party Property Damage: Coverage for damages caused to third-party property.
4. Accidental Damage: Protection for damage to the vehicle due to accidents.
5. Personal Accident Cover for the Driver: Insurance covering the driver in case of an accident.
6. Customizable Coverage Duration: Choose the exact length of coverage that suits your needs.
7. Advance Policy Purchase: Option to buy coverage up to 30 days before it starts.
8. Peace of Mind: Stay worry-free knowing you're insured for the duration of your need.

What are the types short-term car insurance policy that you can buy?

Unlike a comprehensive insurance policy, a temporary policy does not offer exhaustive coverage. Here are some of the different types of insurance policies that you can buy: Gap Insurance: Gap insurance is a type of short-term or monthly car insurance policy for cars that are bought on lease or through finance. Gap insurance policy comes into effect in the event of a total loss or damage beyond repair where the insurance company pays the market value of the car as compensation. If the amount of loan due is greater than its insured declared value, the insurer pays the balance amount to clear the dues on your behalf. Rental Car Insurance: A rental car insurance is a type of short-term car insurance that offers coverage specifically for rented cars. Since these cars are rented for a limited duration, generally lesser than one year, a monthly car insurance policy fits right for these vehicles. Non-owners Car Insurance: For someone who is borrowing a car from either their family or friends, purchasing a temporary car insurance policy will suit right. While this policy is similar to a rented car insurance cover, it is mostly offered to private vehicles.

When and Why to Buy Short-Term Car Insurance:

Short-term car insurance is ideal in specific situations where traditional long-term coverage may not be necessary. It provides essential protection in the following scenarios:

1. Renting a Car: When using a rental car for a short period.
2. Borrowing a Car: If you're driving a private vehicle borrowed from a friend or family member.
3. Selling a Car Soon After Purchase: If you plan to resell a car soon and don't need long-term coverage.
4. Learning to Drive: When you're a learner and need temporary coverage.
5. Driving in Another State: If you're traveling or conducting business in another state.
6. Unusable Own Car: When your primary vehicle is out of service.
7. Inexperienced Drivers: Ideal for drivers with less experience or those who don’t drive frequently.

Key Differences Between Short-Term and Long-Term Car Insurance

Short-term and long-term car insurance serve different purposes. Short-term insurance typically covers a duration ranging from 1 to 9 months, offering flexibility for temporary needs like renting or borrowing a car. It usually comes with a lower premium cost due to its short duration. On the other hand, long-term insurance offers coverage for a full year or more, providing comprehensive protection and often including additional benefits like discounts and loyalty rewards. The premium for long-term insurance is higher but offers continuous coverage without the need for frequent renewals.

When is Temporary Car Insurance Needed?

Temporary car insurance is ideal for situations where you only need coverage for a limited time. It's useful when renting a car, borrowing a car from a friend, or driving a new car that you intend to sell soon. It also serves well for learners, people driving in another state for short periods, or when your own vehicle is temporarily unusable due to repair or replacement.

How to Buy Temporary Car Insurance?

Buying temporary car insurance is straightforward. Start by researching available insurers that offer flexible coverage durations. Provide necessary details like your driving history, car type, and coverage requirements. Many insurers offer the ability to purchase temporary insurance online or via their mobile app. Once you’ve selected your coverage, make the payment, and receive your policy documents instantly. Ensure that the policy duration aligns with your needs.

Factors Affecting Short-Term Car Insurance Premiums

The premium for short-term car insurance depends on several factors:

1. Duration of Coverage: Shorter periods usually result in lower premiums.
2. Type of Car: High-value or high-performance cars typically cost more to insure.
3. Driver's Age and Experience: Inexperienced or younger drivers might face higher premiums.
4. Coverage Type: Comprehensive coverage increases premiums compared to third-party only.
5. Location: Urban areas with higher traffic and accident rates may result in higher premiums.

Is Short-Term Car Insurance Renewable?

Short-term car insurance is not typically renewable like long-term policies. Once the coverage period ends, you will need to purchase a new policy if you need continued coverage. However, some insurers may allow you to extend the policy duration before the term expires. It's essential to review your requirements and renew or purchase a new policy accordingly.

Documents Required for Short-Term Insurance

To buy short-term car insurance, you'll need:

1. Valid Driver’s License
2. Car Registration Certificate (RC)
3. Vehicle Inspection Report (if applicable)
4. Proof of Address (for some insurers)
5. Payment Details (for premium payment)

How to File a Claim Under Short-Term Insurance?

Filing a claim under short-term insurance is similar to traditional car insurance. First, report the incident to your insurer immediately. Provide the necessary documentation, such as a copy of the police report, claim form, and repair estimates. A surveyor may be assigned to assess the damage. If the claim is approved, you will either get cashless settlement at an authorized garage or reimbursement for the repairs made.

Pros and Cons of Temporary Car Insurance

Pros:

1. Flexible coverage duration tailored to specific needs.
2. Lower premiums for short-term requirements.
3. Ideal for temporary vehicle use like rentals or borrowed cars.

Cons:

1. Limited coverage duration.
2. May not be as comprehensive as long-term policies.
3. Higher premiums per day compared to long-term policies.

Now that you know more about temporary car insurance plans, make good use of this monthly car insurance coverage to safeguard your car and avoid financial liabilities. Keep in mind this policy is not available with all insurance companies and you will need to research to find an insurer that offers this facility.