Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. Through her years working in th...

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Reviewed by Melanie Musson
Published Insurance Expert Melanie Musson

UPDATED: Mar 24, 2022

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Car insurance is protection purchased for a vehicle to cover the cost of repairs if that car is damaged, or to pay for damage you cause to someone else’s property if you are responsible for an accident. Because a car insurance policy is specific to a vehicle, you need to own a car in order to purchase car insurance. The policy will be specific to the vehicle listed on the policy; in order to pay for damage caused by an accident, you must be driving the vehicle involved in the collision.

Car insurance coverage follows the vehicle, so you must be a vehicle’s owner in order to insure it. You cannot purchase car insurance for a vehicle that you do not own. If you borrow a friend’s car, your friend should provide the insurance policy; even if you have your own auto insurance, the policy will usually not transfer to a car that you drive.

Typically, car insurance policies are sold in six-month or one-year increments. After the policy period has finished, the car insurance company reviews your driving habits for the previous period and determines if your rates should be increased or decreased. Your policy then renews unless you choose not to renew it or the car insurance company drops you.

In some cases, you may be interested in buying temporary or short-term car insurance. Perhaps you will not own a vehicle for very long, or you are only renting or borrowing it. The vehicle may also be a short-term lease. In these situations, how do you buy car insurance?

Car Insurance for Rental Cars

If you’re renting a vehicle or driving a loaner from your dealership, the company will ask if you wish to take out the additional insurance. This coverage usually costs an extra few dollars a day for the duration of your rental period, and will cover damage caused to the rental car and also pay for damage you may cause while driving the rental car.

If you own your own vehicle, your insurance coverage will transfer to any car that you drive. If you do not carry full coverage on your own auto policy, you will need to purchase whatever coverage is missing from the rental agency or garage. Otherwise, there is no need to purchase additional insurance: Your insurance will already pay for the damage incurred in a rental car.

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Temporary Car Insurance

Some car insurance companies do offer short-term temporary insurance policies. These policies are designed to last for a few weeks or months and cover things like damage to a test-driven vehicle or damage caused by a temporary driver in your household. If you go on an extended vacation, you might want to purchase insurance to cover the vehicle you drive while traveling. Short-term insurance is usually more expensive than regular insurance would be, and may not be available in all states.

Before you decide to purchase a temporary policy, be sure that you cannot obtain the same coverage in a different way. For example, it may be easier to add a driver to your existing policy than to take out additional coverage for that individual. You can also cancel a car insurance policy at any time and pay a prorated premium for the period that you do carry insurance. You can also change your policy coverage at any time. If you wish, you can add comprehensive coverage to your vehicle during the months it is most likely to be involved in a weather-related loss, and drop it for the rest of the year. There is no reason you need to take out an additional policy if you can make the necessary changes to your existing insurance policy instead.

When you speak to your car insurance company about your options, be sure to explain your specific situation. He will be able to look over your policy and determine the best way to obtain coverage for your short-term needs. If your existing policy cannot cover your short-term needs, you may wish to obtain a temporary auto policy.

Your car insurance company may have a temporary auto insurance policy option that can be added to your regular policy. If your insurance company doesn’t offer this option, you can search for a quote online and apply for a short-term policy. Rates will vary, but by comparison shopping for temporary car insurance policies online, you can be sure to obtain the most affordable policy available.

The Bottom Line

While getting affordable rates for driving less than the average amount of miles each year is great, the maximum discount that you can hope for is about 25 percent off of your car insurance premiums. If you drive significantly less than other drivers, then it can feel as if you are overpaying for your car insurance.

There are a few car insurance companies that offer a different type of auto insurance policy for part-time drivers, known as pay-as-you-drive car insurance. What is pay as you go insurance? Pay-as-you-drive (PAYD) insurance is a type of temporary car insurance that issues auto insurance rates based on the number of miles traveled. For example, AAA temporary car insurance is an option for customers who want no-contract car insurance.

Is this the same as pay per mile insurance? It’s similar. Some companies charge car insurance rates according to how you drive, which is known as pay-how-you-drive (PHYD) insurance.

In either case, this is insurance that is designed to save you a considerable amount of money.