Auto insurance: how temporary policies work in the US

Auto insurance: how temporary policies work in the US

Being a responsible driver means having auto insurance, but you don’t always need long-term coverage. Knowing how term policies work can help you save money

It is vital that every driver in the United States has auto insurance. According to the Insurance Information Institute, every state, with the exception of New Hampshire, requires all drivers to be covered by a policy. This is a common sense rule, since accidents or claims can occur at any time. However, it is not always necessary to have long-term coverage, which can cost a lot of money. About a fifth of Americans’ transportation budget typically goes toward auto insurance. It is convenient to know how temporary policies work, an economic option for all people and that is not very well known.

What are term policies and how do I know if I need one?

Term policies are short-term coverage that will protect you for a short time. Some of the reasons why this type of policy may be required are:

-Drive a rented vehicle.
-Driving a friend’s or family member’s vehicle on a trip.
-Sell a new vehicle soon for some reason.
-Being a college student and only driving on vacation.
-Be a foreigner and drive a vehicle in the United States.
-Visit some state and want access to a vehicle.
-Repair of personal vehicle.

These are just some of the times when it is preferable to opt for a term policy.

There are several options to get a policy of this type. Although large insurance companies do not usually offer these temporary coverages, you can always access six-month plans and cancel them after your driving plans have concluded. This option is only recommended if you are completely sure that the policy will not be reinstated later, since the rates for reinsurance could rise due to the interruption of the service.

It is important to note that although there are small insurers that offer policies for one day or one week, many of them can end up being scams. It is best to investigate each plan and company beforehand, choosing the one that best suits the budget, plans and is really valid, since the consequences of not having legal policies are the suspension of the license, fines between $50 and $5,000, or even get arrested.

Temporary policies for a foreign vehicle

Approximately 13% of US drivers are uninsured, according to the Insurance Information Institute. Many tend to drive vehicles owned by friends or other relatives, or even rented, without having a policy, which can cause them problems with the authorities.

For these types of cases, it is best to have temporary non-owner policies. These policies are usually much cheaper than standard insurance policies, and you can cancel it whenever you need, avoiding paying for the months you don’t use. The advantage of these plans is that they have liability coverage, so you can feel confident that you are covered in the event of any accident or loss.

Another option you can turn to is the temporary rental vehicle policies. Although more expensive, you can benefit from better prices if you are only going to drive for short periods. As an aside, any claim or comment made by having this type of policy will not affect the insurance rates for your personal vehicle.

Temporary policies are a favorable option in certain scenarios. Conflicts with the law can be avoided by accessing this type of plan, and they provide the necessary security to drive without worries for a limited period of time.