CarInsurance.com Insights
- You don’t need a special one-month policy to stay flexible. Most standard policies let you cancel at any time without a fee, and you may receive a prorated refund for any unused premiums.
- Pay-per-mile and non-owner insurance policies are often more affordable for drivers who only drive occasionally.
- First-time drivers usually pay higher premiums than those with more experience. That’s why it’s important to compare quotes from several insurers before buying coverage.
Month-to-month agreements are standard for many things today: gym memberships, streaming services and more. Having a month-to-month option gives us a feeling of less commitment, less obligation, and, thus, more flexibility. But there are some things a one-month agreement doesn’t work for, and car insurance is one of those things.
There are several reasons why most U.S. insurance companies do not offer month-to-month car insurance. Learn about your options for alternatives to one-month car insurance.
What is month-to-month car insurance?
Although many insurers allow monthly payments, this should not be confused with temporary insurance. However, no major insurers offer month-to-month insurance.
Major auto insurance policies are in effect for six months to one year. In other words, you may pay for your car insurance monthly, but your policy does not expire monthly.
“While some companies offer one-month policies, the cost for such coverage is generally higher than for longer-term plans. Not all insurers provide short-term policies, so its advisable to call around to find one that does,” says Lauren McKenzie, senior agent with A Plus Insurance in Liberty, S.C. “Be aware that short-term policies may have limited coverage, be more expensive on a per-day basis, and come with special requirements or restrictions, such as age limits, driving history and the type of vehicle being insured.”
Who needs one-month auto insurance?
Here are a few situations that could cause you to seek a short-term car insurance solution:
- You’re renting a car and aren’t happy with the coverage offered by the rental company.
- You’ve purchased a car you plan to resell soon but need temporary coverage until it sells.
- You need coverage for a vehicle you drive only occasionally or seasonally, like a collectible.
- You need coverage for a student driver who only drives when home on college breaks.
- You have a car in another state, like a vacation home, that you drive during certain times each year.
First-time buyers: How much would one month of coverage cost?
If you’re buying car insurance for the first time, paying monthly can sound appealing. It feels like less of a commitment and gives you the flexibility to switch insurers if you’re not happy with your coverage.
The good news is that you don’t need a special one-month policy to get that flexibility. Most car insurance policies are sold in six-month terms, but you can usually cancel at any time and receive a refund for any unused premium, minus any applicable fees.
That means the better question isn’t whether you can buy one month of coverage, but how much it costs to get insured in the first place.
For a basic liability policy, the national average premium is about $92 per month, according to CarInsurance.com’s analysis. If you’re a young driver in your early 20s, expect to pay more. Full coverage for young adults averages about $338 per month before discounts.
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Alternatives to one-month car insurance
“Most insurance providers offer six-month, 12-month, or sometimes even three-month policy terms. However, customers may be able to cancel their policy after just one month without incurring cancellation fees, depending on the insurance company,” McKenzie says.
Since major U.S. insurers don’t offer month-to-month car insurance, there are a few alternatives:
Usage-based insurance
Usage-based car insurance monitors mileage, driving habits, or both and then allows you to pay for insurance based on those factors. Progressive’s Snapshot, State Farm’s Drive Safe & Save and Metromile’s pay-per-mile program are examples of usage-based insurance options.
Common usage-based insurance, called pay-per-mile (or pay-as-you-drive), allows you to do that. This type of policy may be an excellent option for someone who drives infrequently. You can cancel your pay-per-mile policy at whatever point you no longer have the vehicle.
Limited-use policy
A limited-use policy gives year-round coverage but only up to a specific mileage cap: 2,000-4,000 miles per year is the most common. Limited-use policies offer relatively low rates, which make it possible to keep the insurance year-round even if you do not frequently drive the insured vehicle.
Add a driver to an existing policy
This alternative may be most fitting for parents of college-aged kids who live in the home at certain times of the year and share a vehicle during those times. Most insurers want anyone who lives with you or has access to your car to be listed as a driver on your policy.
If your college student drives a different vehicle, you may be able to add the car to your existing policy and then remove it when they go back to school if they’re no longer driving. Be sure to add the vehicle to your policy if it is being driven.
Guide: How to insurance students while they’re away at college
Rental car insurance from the rental car company
If you don’t own a vehicle but regularly rent one, you’ve probably been offered rental insurance from the rental car company. This is temporary car insurance that is only active during your rental agreement.
Rental car insurance can seem pricey, but it is an affordable way to protect your financial well-being, especially if you are not already paying for car insurance.
If you own an insured vehicle but sometimes rent a car, check with your current auto insurance provider to learn how your existing coverage may extend to your rental car. That will help you identify any coverage gaps and decide whether you need supplemental rental car insurance.
Another great tip is to check with your credit card company if you use a credit card to rent a car. Many major credit card companies offer rental car coverage perks if you book the entire rental on one card.
Early cancellation of a standard policy
Here’s another tip: most car insurance companies do not charge cancellation fees.
This means you could sign a six-month insurance policy (or even a one-year policy), and whether you choose to pay monthly or prepay the entire premium, you can still cancel the policy at any time. If you’ve prepaid the premium, the insurance company will send you a prorated refund for the months you have not used.
If you need insurance for just one month, you can purchase the shortest term available and request cancellation after one month.
Compare the cost of car insurance online
Remember, you can compare monthly costs for a six-month or one-year policy.
When comparing quotes, it is essential to understand that insurance providers consider various factors when determining your rate. Factors like the state you live in, your driving record, your credit score, your vehicle type, and the type of coverage you need are just a few things providers will assess to determine your rate.
That means costs will undoubtedly vary, making it all the more important to get quotes from several providers. Some providers are notoriously cheaper than others for certain driver types.
Don’t forget to ask potential providers about what discounts they offer that you might qualify for. Discounts can result in significant savings.
Month-to-month car insurance FAQs
Can I get a one-day car insurance policy?
No. One-day car insurance policies do not exist in the U.S., except for rental car insurance when your rental agreement is for one day.
Why do car insurance companies have longer terms?
There are a few reasons insurance companies do not offer short-term car insurance:
- People seeking short-term insurance may be seen as a greater risk for claims.
- Insurers need to collect more money in premiums than they pay out in claims. Collecting premiums for only a month or so could create an imbalance between the costs of writing the policy and the revenue it generates, especially if a claim is filed during that time.
- Short-term insurance has historically been abused. Michigan, which once allowed a seven-day policy, is a great example of that. The policies were banned after it became apparent that drivers were using the seven-day policy to show proof of insurance for car registration, then not renewing and driving uninsured.
Does GEICO provide a one-month car insurance policy?
No. GEICO does not offer a one-month car insurance policy. They offer standard terms of six to 12 months but provide usage-based insurance called DriveEasy, which tracks driving habits to reduce rates.
Can a first-time driver buy a one-month car insurance policy?
No. Most insurers don’t offer one-month car insurance policies, whether you’re a first-time driver or an experienced one. Instead, you’ll typically need to purchase a standard six-month or 12-month policy.
The bottom line: Monthly car insurance
Major insurers in the U.S. do not offer month-to-month policies. That may be bad news if you’re looking for a temporary car insurance solution, but the good news is that other options are safe, affordable and help you maintain the right coverage for your needs.
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