Short term car insurance: is it worth it for you?

Car insurance is no longer just purchased on a yearly basis and recently there has been an increase in short term policies coming to market.

These policies come in all shapes and sizes, but they’re usually for people who don’t own a car, but need a vehicle — and insurance — for a few hours, days, or weeks.

With many, all you need is an app downloaded to your phone to purchase insurance for the length of time you need.

You will need permission from the car owner, be it a friend, family member or neighbour, and you should check the insurance details carefully before you go. go.

Anna-Marie Duthie, insight consultant at Defaqto, says: “With the average price of a car increasing significantly since the pandemic, borrowing a friend’s car for a one-off trip may be a better option.

“If you’re buying short-term car insurance, it’s important to check car insurance coverage and what the policy actually covers.

Why is short-term insurance becoming more popular?

The pandemic has changed our driving habits, resulting in more people working from home and an extended period when no one has been able to get out on the road.

The current cost of living crisis has also driven up the cost of fuel and car ownership. Petrol prices rose 11 pence in March while diesel jumped 22 pence a liter – the biggest monthly increase on record.

The cost of owning a car has also increased significantly since the pandemic. A shortage of new cars due to production and supply issues has caused the demand for used cars to skyrocket. As a result, some of the most popular cars, like the Ford Fiesta, grew by as much as 57% between 2019 and 2021.

Therefore, borrowing a car for a short period of time can be a cheaper option for many drivers, especially those who have decided to give up a car altogether.

Iain Hamilton, Head of Auto Underwriting at Aviva, said: “Short term auto insurance is undoubtedly a growing market, and the need has been accelerated by the Covid pandemic which has changed the way people live. their life: for example, smart work, where they work partly from home and partly in the office.

Data shows a 29% increase in the number of people looking for short-term insurance policies between 2019 and 2022, according to MoneySuperMarket. The comparison site also saw a 143% increase in the number of people visiting its short-term insurance page during this period.

Which drivers can benefit from short-term insurance?

Anyone can get short-term car insurance, but it’s usually for those who don’t own their own car and need to drive temporarily. This can be for a vacation, or for a one-off trip, for example.

There are also short-term policies designed just for learner drivers, some of which last up to 28 weeks. This gives learners the option of purchasing a policy while they learn, instead of paying for an annual policy.

There are 20 insurers offering 60 short-term insurance products, including Aviva, Collingwood Insurance, Cuvva, RAC and Marmalade. Of these, 31 are intended for short-term insurance and 29 are specifically intended for learner drivers.

How much does it cost?

The price you pay for any type of car insurance depends on a range of factors, including a driver’s age, occupation and experience, as well as the type of car they own, what they is used and where it is stored.

However, it can cost on average around £10 per hour for short-term insurance, £20 per day and £60 per week, according to Defaqto.

With RAC, for example, you’ll pay an average of £16 for an hour of insurance, £28 for a day and £92 for a week.

To calculate overall costs, it’s worth looking at how often you may need to pay for short-term insurance. As a single contract it may be cheaper than an annual policy, but if you use it for several weeks or months of the year it is unlikely to be cheaper. You’ll also need to factor in extras, including the cost of an overage if you make a claim.

What level of cover is provided?

Most short-term policies offer comprehensive auto insurance, the highest level of coverage available. Some policies also allow you to drive a car for leisure or business purposes.

European cover and breakdown insurance are available from some insurers at an additional cost.

Are all cars covered?

It is up to an individual insurer to decide which cars can be covered. The RACs, for example, state that cars must have a market value of £75,000 or less, not be hire or hire vehicles, not be hired on a contract of 12 months or less, or have engine modifications.

What to pay attention to

Before getting behind the wheel, there are several things to check when it comes to short-term insurance. They include the following:

• For how long you are insured: You will only be insured to drive the car for the authorized time. While most insurers allow you to add overtime through an app or online, if you haven’t done so and are driving the car without insurance, you could be fined and/or receive penalties. points on your license.
• Cancellation: If you cancel a policy you may not be refunded the premium you paid, unlike traditional car insurance there may be no cooling off period. Only six out of 31 policies allow drivers to cancel once coverage has started.
• Level of cover: you may not get the same level of cover with a short-term policy. For example, 29 out of 31 policies do not cover windscreen damage, which can cost £400 or £500 to repair.
• Deductible: the deductible – the amount you will have to pay if you make an insurance claim
• – can be high. Six of the 31 policies have a minimum deductible of £500.
• Courtesy car: In the event of an accident, it is unlikely that a courtesy car will be provided to you, unlike traditional insurance.
• Speeding tickets and parking fines: If you borrow someone’s car and you receive a speeding ticket or parking fine, these are usually sent to the owner of the vehicle. It is then up to them to confirm who was driving the car at the time.

What about car owner’s insurance?

If you borrow someone else’s car, their policy and bonus-malus should not be affected because you take out separate cover.

What are the best alternatives?

If you do not wish to take out a short-term contract, you can be added to another driver’s insurance as a named driver.

There are also automobile clubs, such as Zipcar, which allow drivers to temporarily borrow a stranger’s car. You will usually pay a monthly or annual fee, around £240 per year, and then be able to borrow a car for a short period. The cost of insurance and in some cases gasoline is also included. According to provider iCarhireinsurance.com, car owners driving less than six hours a week could save around £1,600 a year by using one.

You can also purchase auto insurance and pay for it based on the distance you travel. The By Miles provider allows drivers to pay for every mile they drive, alongside an annual policy, which can be a cheaper option if you don’t drive a lot.

About Ellen Lewandowski

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