Short term insurance is generally a car insurance policy for a specified period of less than six months. While short term car insurance policies are common in European countries, most US car insurance companies do not offer such policies. Car insurance policies generally are written for a minimum of six months. See Cheap full coverage car insurance for how to save on the cost of car insurance.
Many people believe when they are traveling that they need some additional car insurance policy to travel within the United States. This is not always the case.
Driving your Car to Other States
If you drive, own or lease a car, each of the 50 states requires you to either have car insurance or provide “proof of financial responsibility”. Proof of financial responsibility is usually met by having car insurance. Each state also sets the minimum coverage amount and specific types of insurance it requires – and there is a lot of variation in the minimum limits each state requires.
If you and your car are already covered by a car insurance policy, you should read your policy to determine whether or not your current car insurance policy already covers you for the travel you want to do. Nearly all car insurance policies have a provision that will adjust your coverage from the minimums required in your state to the minimum insurance or proof of financial responsibility in another U.S. state. For example, assume that you have the minimum coverage required in California, which is $15,000 for bodily injury per person, $30,000 per accident bodily injury, and $5,000 for property damage or simply 15/30/5. You drive to Nevada which has a minimum car insurance coverage requirement of 15/30/10. If you are in an accident in Nevada with your California insured vehicle, most car insurance policies will cover you for Nevada’s minimum limits of 15/30/10, doubling you coverage for property damage without any additional cost to you.
Driving your Car to Other Countries
Some car insurance policies will also extend to the Canadian provinces and provide the similar adjustment to the required minimum coverage in each covered province. If your car insurance policy has such a provision, you do not need to purchase Canadian car insurance for travel to those covered provinces.
However, be aware that your car insurance policy will not cover your car or you in Mexico. It is a crime in Mexico to drive without insurance. You could be arrested and have your car impounded if you are at fault in an accident and without insurance from a Mexican car insurance company. If you plan to travel to Mexico, contact a Mexican chartered insurance company. Mexican car insurance companies do sell short term car insurance policies for the duration of your trip.
Rental Cars
Every time you rent a car in any state, you will likely be offered rental insurance for your rental car. Many people agonize over whether to purchase this coverage or not. Before you buy it, you should know what you are really being sold. Every rental car must have the minimum amount of car insurance or have proof of financial responsibility based on where the rental car is normally garaged. So when you rent a car, there is insurance that covers the car you are renting. However, the “insurance” the rental car is offering is really not car insurance from an insurer – it’s a loss damage or collision damage waiver. Basically, this waiver offered by car rental companies shifts of the risk of loss or damage to the rental from you to them – for a fee. This fee is what is commonly referred to as rental insurance – and its pretty darn expensive. This “insurance” will pay for damage caused to their vehicle by your negligence or any damage you caused. You need to review your own car insurance coverage to determine whether you already have liability, collision, and comprehensive coverage. Also, many credit cards also provide rental car insurance coverage when you use their credit card with the rental insurance benefit to pay for your car rental. Check with your credit card company before you travel to verify you still have the rental insurance benefit as credit card companies change their benefits often. Also check to see if it covers your rental car and any other car you damage in a car accident. As with the rental car agency’s “insurance”, its not technically insurance but a guarantee of payment for the damage caused to the rental car.
Also, when you travel, you many also have valuable belongings with you. Rental car companies also offer insurance for your personal property stolen from your rental car. If you personal property is already covered by a homeowners’ or renter’s policy, it’s a waste of money to buy personal property insurance from your rental company.
