Short Term Car Insurance: A Quick Guide
Short-term or temporary car insurance is a flexible coverage option for car owners who don't
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What is Short-Term Car Insurance?
Short term car insurance is a type of car insurance policy available for a limited duration. Most motor insurance providers offer a vehicle insurance policy for a tenure of one year, three years or sometimes five years. However, the short-term car insurance policy revolves around a time duration of as low as one day insurance for car, or one-month car insurance plan or can extend for up to 3 months as well.
If you are not looking to buy a four-wheeler insurance policy for an entire year, you can select short-term car insurance. Although short-term car insurance is rare in India, it is very popular in foreign countries.
How Does Short Term Car Insurance Work?
A short-term car insurance policy became necessary when insurance requirements became time-bound and limited. It is required when the car owner does not need insurance for a long period of time.
You must have a strong reason to buy a short-term car insurance policy. Driving a rented car for some time, relocating to a new city, driving for a short distance, and learning to drive are some cases wherein you can purchase temporary car insurance.
In all these examples, you do not need car insurance for more than 12 months. This means that your requirement for vehicle insurance can range from a few hours to some months. Therefore, in all these cases, buying a one month or 3 month car insurance plan makes complete sense.
Generally, you have to provide the following information to the insurer to buy a short-term motor insurance policy:
- Your details, such as name, profession, address, gender, etc.
- Your identification documents, such as your claim history, driving licence, etc.
- Proof of address
- Details of the car, such as the capacity of the engine, its make and model, seating capacity, type of fuel, etc.
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Types of Short Term Car Insurance
The coverage of a short-term car insurance policy is not as exhaustive as compared to comprehensive car insurance. The following are the different types of short-term car insurance:
- Rental Car Insurance: This is a short-term car insurance policy wherein you can get short-term coverage for rental cars. Generally, damages due to accidents, accidental injuries, etc., are covered in a rental four-wheeler insurance policy.
- Gap Insurance: This insurance policy is for cars that you have bought on loan or lease. Under this policy, the car should be financed by a third party, and the insurance provider compensates the market value of the vehicle. This type of insurance is not offered in India but is common in other countries. The coverage offered by the gap insurance policy is activated in the situation of a total loss under which the damage is beyond repair. If the amount of the loan is more than the Insured Declared Value (IDV) or its market value, then this type of short-term insurance pays the balance amount for closing the loan on the insured.
- Non-owner Insurance: It is the same as rental car insurance but offered for private cars only. For instance, one can buy non-owner insurance for a vehicle that he/she is borrowing from a relative or friend.
- Pay As You Drive Insurance: Pay as you drive insurance is an innovative insurance solution that lets you buy motor insurance only for the number of kilometres your car is driven. Moreover, this plan also rewards a policyholder if he/she drives his/her vehicle within the chosen kilometre limit. Thus, if you are an occasional driver and wish to save up on your own damage premium, the pay as you drive policy can be the right choice for you.
Benefits of Short Term Car Insurance
You can choose to buy a short-term car insurance policy for one month,three months, six months, or nine months as per your requirements. In this type of car policy, you pay a lesser monthly premium than a standard or comprehensive insurance policy with a longer duration. The benefits of having this type of motor insurance policy are:
- Instant coverage
- Third-party property damage coverage
- Coverage against injury to third-party
- Accidental damage
- Provides personal accident coverage for the driver
- Gives the option to buy a policy for a minimum of 30 days before its start date (one month car insurance)
- The duration of coverage can be fully customised
- Gives you peace of mind as well
Difference Between Short-Term and Long Term Car Insurance
Have a look at the table below to understand the key differences between short term car insurance and a long-term policy:
| Policy Features |
Short-Term Car Insurance |
Long-Term Car Insurance |
| Coverage Duration |
1 day - 6 months |
1 - 3 years |
| Premium Payment |
Higher amount per month, paid for a short duration |
Lower monthly premium due to long-term commitment |
| Flexibility |
More flexible, suitable for temporary needs |
Less flexible but provides continuous coverage |
| Renewal Requirement |
Frequent |
Fewer |
| Cost-Effectiveness |
Expensive for prolonged use |
Highly cost-effective in the long run |
| Who Should Opt |
Infrequent drivers, rental cars, short trips |
Regular car owners who need uninterrupted coverage |
| Discounts & Benefits |
Fewer discounts and perks |
Often includes discounts for long-term policies |
| Policy Cancellation |
Easier and without high penalties |
Involves penalties/refund adjustments |
When Should You Buy Short Term Car Insurance?
Temporary car insurance plans provide insurance coverage against various liabilities, such as third party, natural disasters, accidental damages, personal accidents of the driver/owner, etc. The policy also provides coverage against financial losses that arise out of manmade calamities.
You can opt for a temporary car insurance car policy in some specific situations. These are:
- When you are using a rented car
- When you are learning to drive
- When you are using a private vehicle after borrowing it from a relative or friend
- When you want to resell your car soon after its purchase
- When you have to use a vehicle for short-term in some other state for travel or business or job
- If you are a driver who has less experience in driving
- When you own a car but it is very rarely used or driven for less kilometres
Wrapping Up!
Now that you know much about a short-term, one month or three month car insurance policy, you can make good use of these monthly car insurance plans to safeguard your vehicle. This is the best way to avoid financial liabilities when using a car for a short duration.
However, you must remember that this type of motor insurance policy is only available with some vehicle insurance providers. You must do thorough research to find an insurance provider offering short-term or temporary car insurance in India.
