If you only need car insurance for a brief period, such as three or six months, there aren’t many policies specifically designed to provide this type of cover.
One of our top hacks is one of the most obvious:
- Take out a regular car insurance policy, pay monthly
- Cancel the car insurance when you don’t need it anymore.
What's in this guide?
- Want short term car insurance? Start comparing some options
- Why would you need short term car insurance?
- 3 ways to get car insurance for a short period of time
- Pros and cons of short-term car insurance solutions
- Who is eligible for short-term car insurance?
- Make sure you read the fine print
- Are there any short-term car insurance exclusions?
- How much does short-term car insurance cost?
- How to choose short-term car insurance
- FAQs about short-term car insurance
Want short term car insurance? Start comparing some options
Why would you need short term car insurance?
There are several reasons why you might need to get short term car insurance, such as:
- You have a short-term permit to drive an unregistered vehicle, for example if you are taking it to a mechanic’s workshop
- You’re planning on moving overseas in less than a year
- You sell your car before the 12-month insurance term comes to an end
- You need transport to and from a short-term summer job
- You own a sports car or classic vehicle that you only drive for a short period each year
If any of the above scenarios apply to you, it’s time to start looking for short-term car insurance. Let’s take a closer look at the three options available to you and their benefits and drawbacks.
3 ways to get car insurance for a short period of time
If you only want to insure a vehicle for a week, a month or even 6 months, you may need to find short term car insurance. Here are 3 ways to get short term cover for your vehicle.
1. Pay premiums fortnightly or monthly
As we mentioned above, the simplest option is to select a standard car insurance policy of your choice that allows you to pay your premiums fortnightly or monthly. This is a fast and effective way of getting your car covered for your needs and accessing the full range of insurance benefits. Once you no longer need cover, simply cancel the policy. There are some insurers, like Cove for example, who allow you to pay monthly and you’re free to cancel your policy at any time.
2. Add a driver to an existing policy
If you’re borrowing a relative or friend’s car for a temporary period, you could ask them if they would consider adding you to their car insurance policy as a listed driver.
3. Rent a car instead
This option may be more cost-effective than you think. Some credit cards will let you pay for rental cars with reward points, and there are many car rental discounts available, such as free upgrades, free days at no extra cost and straightforward price reductions. Some credit cards also offer complimentary rental car insurance cover, or you can purchase the cover you need from the rental company.
Each of these options has its own pros and cons, so keep reading to find out which option is better for you.
Pros and cons of short-term car insurance solutions
Which of these 3 short-term car insurance options is the best solution for your cover needs? Check out the table below for more information on how each option works, its benefits and its disadvantages:
Pay premiums fortnightly or monthly
- How it works: Pick any car insurance policy you want that allows you to pay your premiums fortnightly or monthly as you go rather than annually in advance. When you no longer need cover, cancel the policy.
- Who it could be suitable for: Anyone who needs short-term car insurance in New Zealand and wants the freedom to pick the policy of their choice.
- Cancellation fees may apply
- You will need to pay special attention to the policy terms and conditions to ensure this is a viable choice
Add a driver to an existing policy
- How it works: A temporary driver is added to the car owner’s existing car insurance policy for a limited period.
- Who it could be suitable for: People who are borrowing someone else’s vehicle for a short period, for example if you’re home from uni for the summer and driving your parents’ car.
- No need to take out a separate policy
- Simple and convenient option
- Access all the benefits of a regular car insurance policy
- Can significantly increase the cost of cover
- Make sure to avoid the illegal practice of “fronting”, which is where you wrongfully list someone else as the main driver in return for cheaper premiums
Rent a car
- How it works: Rent a car for the period required.
- Who it could be suitable for: People who are moving house and may require a specialist vehicle such as a ute or a van.
- Great for anyone who needs a very short-term solution
- You are able to choose a vehicle to suit your needs
- There are many discounts and savings available
- Some credit cards offer complimentary car hire insurance
- You can purchase cover from the rental company to cover the vehicle during the rental period
- Insurance from rental companies can be expensive
- Is only suitable for very short-term needs
Who is eligible for short-term car insurance?
Short-term car insurance is available to suit the needs of a wide range of drivers. If you hold a valid licence that allows you to drive in New Zealand, you’ll generally be able to qualify for cover.
However, special eligibility requirements may apply depending on the temporary car insurance option you choose. For example, if a friend or relative is going to add you to their policy as a listed driver, you’ll need to make sure that you list the correct person as the main driver of the vehicle.
In addition, some insurers may refuse cover to drivers of specific ages, such as those under 18 years of age or senior motorists. Check with your insurer for full details of any eligibility requirements that apply.
Make sure you read the fine print
If you’ve decided to buy a 12-month policy and then simply cancel it when you no longer need it, make sure you look closely at the early cancellation fees and terms set out in the policy’s product disclosure statement (PDS) before deciding whether this option will save you money.
Issues to be wary of include:
- Cancellation fees. Some insurers charge a fee if you cancel your policy after a certain amount of time. This can be up to around $40 depending on the insurer.
- Premium refunds. If you’re paying in advance for 12 months, check that the insurer will refund your unused premium.
- Paying month-to-month. Check that you can pay month-to-month. If you’re paying your premiums on a month-to-month basis, you won’t need to worry about refunds.
Are there any short-term car insurance exclusions?
The general exclusions that apply to ordinary car insurance policies also apply to short-term car insurance. For example, you will not be covered if:
- You were driving while under the influence of alcohol or drugs
- Your vehicle was being used in an unsafe or unroadworthy condition
- Your vehicle was being driven while overloaded with passengers or goods
- Your claim is for wear and tear, gradual deterioration, rust or depreciation
- Your claim is for tyre damage caused by road punctures, cuts or bursts
- Your claim is for repairs to old damage
- Your claim is caused by mechanical, structural or electrical failures
- Your claim is for intentional loss or damage caused by you or someone acting on your behalf
- Your car is legally seized or repossessed
- Your claim arises due to your involvement in criminal or illegal activity
- You fail to properly secure your car after it breaks down, is involved in an accident or is stolen and recovered
How much does short-term car insurance cost?
The cost of short-term car insurance varies depending on the option you choose:
- Pay premiums monthly or fortnightly. Choosing this option allows you to shop around and compare a wide range of policies before selecting one that offers good value for money. However, remember to include cancellation fees when calculating total costs.
- Add a driver to an existing policy. The cost of this option can vary greatly based on the added driver’s age, gender, driving history and more. However, in many cases, adding an extra driver can work out to be much more cost-effective than buying two separate policies.
- Rent a car instead. With this option you need to consider the cost of renting a car and the cost of insurance for the vehicle. How long you need the vehicle will obviously have a huge impact on cost, while it’s also important to be aware that insurance purchased from rental companies is generally quite expensive.
Remember too that insurers will assess a number of other factors when calculating your premium, including your age, gender, driving experience, claims history, the car you drive and where you live.
How to choose short-term car insurance
Which short-term car insurance option is right for you? To work this out you’ll need to answer a few simple questions:
- Why do you need cover?
- How long do you need cover for?
- What type of car insurance do you want?
Once you know which of the 3 options is the best fit for you, it’s time to start comparing quotes and policy features across multiple insurers.
Before you choose, make sure do a comparison of the car insurance options out there.
FAQs about short-term car insurance
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