Is short-term car insurance “temporary”?

If you decide to take out car insurance for two weeks while you search for a suitable long-term policy, does this mean that you have “short-term” or “temporary” car insurance in place?

We define short-term car insurance by comparing it with its long-term counterpart, and we find out what temporary car insurance is and how it differs from a short-term policy.

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Difference between short- and long-term insurance

John Duckett, founder of CarInsuranceCheck, says that insurance is often a grudge purchase. However, if you want to protect yourself and your assets from liability, you need to make sure you have it in place. 

In general, there are two kinds of insurance you can take out:

1. Short-term insurance. This involves insurance policies that are only applicable for a set period of time, and it’s usually applied to assets, such as laptops and homes.
2. Long-term insurance. This kind of insurance is taken out for the duration of someone’s life, and it’s usually connected to that person. Examples include life cover or funeral insurance.

Car insurance falls under short-term insurance since it applies to an asset that will only need to be insured for the duration of its existence, rather than the lifetime of the owner.

Iain Massey, senior manager of broker enablement at Indwe Risk Services, says that short-term car insurance is usually issued on an annual basis and it can be paid through monthly debit orders.

How does temporary insurance fit in?

Temporary insurance is often confused with short-term insurance. However, the latter is usually taken out over a period of one year, while the former can be taken out for a single day.

Temporary car insurance can be useful in the following situations: 

• If you briefly move to a different town that’s considered a higher risk than the area your existing policy covers.
• When your car is driven by more individuals than you can add to your short-term insurance policy.
• When you wish to remain insured while you search for a better short-term insurance policy.

When should you stick with short-term insurance?

Massey says that if you wanted to cancel your short-term insurance policy after a few months, this could be done by giving immediate notice of cancellation to the insurer.  

He believes that it would, therefore, be prudent to acquire a short-term policy, pay it monthly, and cancel the policy when cover is no longer required, rather than opting for a temporary policy, which could result in coverage gaps.

If you still wish to take out temporary insurance, it is safe to do so provided that you work through a legitimate insurance provider. However, you should always be cautious and make sure you’re sufficiently covered. 

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