There are a few situations where Ontario and Alberta vehicle owners may seek short-term car insurance. Perhaps you’re renting or borrowing a car to take a trip or replace a vehicle in the shop. Maybe you own a car that you only use during certain times of the year. Or perhaps you intend to sell your vehicle in the next few weeks and won’t require insurance after that point, and you’re wondering about your short term car insurance cost options.
Regardless of the reason, there are a variety of ways to purchase short-term car insurance that will protect you in the event of an accident or other loss.
Short term car insurance cost: Frequently Asked Questions
What Is temporary or short-term Insurance?
Temporary or short-term insurance is any coverage term lasting less than a full 12-month period. It refers to a range of coverages, including coverage sold by car rental agencies, the protection offered by certain credit cards and insurance policies sold by insurance companies.
In most situations, the best insurance solution is purchasing a standard auto insurance policy and modifying it to meet your specific needs. You can then cancel this policy when coverage is no longer required. This approach ensures that you and your vehicle have the insurance protection required by law and any optional coverages, such as collision or comprehensive coverage.
Short term car insurance cost, and what does temporary insurance cover?
Coverages offered by temporary insurance solutions can vary greatly.
Standard insurance policy
Ontario and Alberta auto insurance policies contain a standard set of mandatory coverages. These coverages include:
Accident benefits coverage – Protection if you’re injured or killed in an accident. Accident benefits pay for additional medical costs such as rehab, physio, attendant care, and other home expenses. There is also some loss of income coverage if you cannot return to work.
Direct compensation – property damage coverage – Pays to repair or replace your car and its contents if you’re in an accident caused by someone else.
Third-party liability – Helps pay for lawsuits and damages after an at-fault accident.
Uninsured automobile coverage – This coverage steps in if you are injured or killed by a hit and run driver or a driver who doesn’t have insurance.
You can also purchase optional coverage such as:
Collision and upset – Pays for any damage caused to your vehicle by an at-fault accident with one or more vehicles or if you take the ditch or hit something.
Comprehensive coverage – Protects you when your vehicle is not moving. Comprehensive coverage includes vehicle theft, vandalism, and falling or flying items such as a tree limb or a hockey puck.
Credit card/rental agency insurance
Insurance protection offered as part of your credit card agreement or by car rental agencies can vary significantly from company to company. Some of the more common types of coverage provided by these organizations include:
Collision damage waiver/Loss damage waiver – This coverage responds if the vehicle is lost, damaged or stolen while under your care.
Personal accident and effects coverage – This insurance steps in to provide protection such as accidental, death and dismemberment coverage if the renter or a passenger are injured in an accident. It also includes insurance for the car’s stolen, lost or damaged personal effects during the rental period.
It is important to read the contract terms for insurance protection offered by credit card companies or rental agencies to ensure you understand the protection provided and any applicable limits and deductibles.
Seasonal coverage
Some drivers only need insurance on a vehicle for part of the year: This applies to owners of classic, antique or collector cars that are only ever driven during summer. Or perhaps you have a sporty summer vehicle and a dependable winter car that drives better on ice and snow.
A standard insurance policy should protect seasonal vehicles and can be customized to minimize your premiums. For example, if you own a collector vehicle that’s only ever driven in the summer, you can easily remove “road” coverages during the winter. This approach might remove collision coverage entirely during the winter, drop other limits to their minimum amounts and increase deductibles – leaving comprehensive coverage in place in the event of a fire or vandalism.
This seasonal approach provides you with the best of both worlds; full coverage when you need it and lower insurance premiums for when you don’t.
Can I get a 3-month insurance policy?
Standard auto insurance policies in Canada are issued for 12 months. However, if you require a shorter term, you can purchase a policy for the whole year and remove or cancel the coverage.
While this approach offers you complete flexibility regarding how long you keep your auto insurance active, it comes at a financial cost.
Because insurance companies spend considerable time and resources setting up and renewing an insurance policy, they will usually charge a fee if you cancel the policy before the end of the term.
This fee is calculated using what is called a “short-rate.” The insurer will calculate how many days of coverage are left in the term to determine how much of the premium should be credited to you. They will then deduct a fee from that amount. Every insurance company calculates this fee slightly differently, but you can expect a cancellation fee of as little as 10% or as much as 30%, of the premium for the remaining part of the term. Typically, the shorter the period of time your policy was in force, the higher the percentage. Read more about auto insurance cancellation fees in Ontario.
What is the shortest time you can insure a car?
The shortest period you can “insure” a car is 7-15 days. Often auto insurance policies provide new car buyers 7-14 days as a grace period to inform them of a new purchase. Suppose you already have an auto insurance policy with an insurer, and you are simply driving the vehicle out of the province or to a repair location. In that case, you can do so within the grace period. However, this coverage has limitations, and you need to have an insurance policy already in place for this grace period to apply. Be sure to speak to your insurance professional before using this as a temporary solution.
Do you need to buy temporary insurance if you’re renting a car?
The insurance protection offered by rental agencies is voluntary. Therefore, many people choose not to purchase this coverage.
In addition, many people have limited coverage provided by a credit card company. This coverage is usually automatic if you rent the vehicle using that credit card and will often provide you with some protection if you experience an accident, vehicle theft or other situations named in the coverage. Be sure to read about the coverage offered before relying on this solution, as limitations usually apply.
If you already have an auto insurance policy for another vehicle, you can add what is known as a non-owned auto endorsement. This inexpensive coverage will protect borrowed and rented cars for the entire length of your auto insurance policy term. If you often rent vehicles, this is a cost-effective solution that can eliminate some of the stress and expense of renting a car.
