A Quick Walkthrough on Short Term Car Insurance Plans
When we talk about the tenure of an insurance plan, it reminds us of a long-term commitment between the insurance company and the insured. Most of the general insurance providers offer an insurance policy for the tenure of one year or three years or sometimes even five years. However, the current era of vehicle insurance has witnessed some innovative products that are very dynamic. A new car insurance product in this category is a short-term or monthly insurance plan. Even though it is a new product in the vehicle insurance sector, but some car insurance providers are offered monthly and short-term car insurance plans. Let us learn more about it here.
What is Short Term Car Insurance?
As the name of this insurance plan says, it is a car insurance plan that is available for a short duration or a temporary tenure. Since the basic concept of this policy revolves around time duration, it can be as low as a few minutes and can extend for up to a few months. If you are not looking to buy a car insurance policy for an entire year and want to choose for a short term, you can select short-term car insurance. Besides this, you can buy a short-term car insurance policy either online or offline depending upon the availability of your insurance provider.
How Does a Short Term Car Insurance Work?
When you purchase a car insurance policy, you majorly get two options to choose from – third-party liability insurance and comprehensive insurance. On one hand, where third-party liability insurance is the basic insurance required for all the cars that are plying on the Indian roads as per Motor Vehicle Act. On the other hand, a comprehensive car insurance policy provides extensive insurance coverage. In your comprehensive car insurance policy, you can add rider benefits to enhance its coverage. Besides, the minimum tenure for which these car insurance policies are valid is one year.
A short-term or more commonly temporary car insurance policy came into the picture when the requirements of insurance are time-bound and limited. You must have a strong reason to buy a short-term car insurance policy. For example, driving a rented car for some time, relocating to a new city, and learning to drive are some of the cases wherein you can purchase short-term insurance. In all these examples, you do not need a car insurance policy for more than 12 months. This means that your requirement for car insurance can range from a few hours to some months. Therefore, in all these cases buying a short-term car insurance policy makes complete sense.
Short-term car insurance is rare in India, but it is very popular in foreign countries. You can easily search on the internet for short-term car insurance providers and get to know about the coverage and other related information. Generally, you have to provide the following information to the insurer to buy a short term car insurance policy:
- Your details such as name, profession, address, gender, etc.
- Your identification documents such as your claim history, driving license, etc.
- Proof of address.
- Details of the car such as the capacity of the engine, its make, and model, seating capacity, type of fuel, etc.
Types of Short Term Car Insurance
The coverage of a short-term car insurance policy is not exhaustive as compared to a comprehensive car insurance policy provided. Under a comprehensive car insurance policy, the policyholder is protected against the damage of the car, theft of the car, third-party liability expenses, damage because of natural calamities and fire, etc. While the scope of a temporary car insurance policy is very limited. It is available in the below-mentioned types:
- Rental Car Insurance: It is a type of short-term car insurance policy wherein you can get short-term coverage for rental cars. Generally, damages due to accidents, accidental injuries, etc. are covered in a rental car insurance policy.
- Gap Insurance: This insurance policy is for cars that you have bought on loan or lease. Under this policy, it is required to get the car financed by a third party. The coverage offered by the Gap insurance policy is activated in the situation of total loss under which the damage is beyond repair. Here, the insurance provider compensates for the market value of the vehicle. If the amount of loan is more than the Insured Declared Value (IDV) or its market value, then this type of short-term insurance pays the balance amount for closing the loan on the insured.
- Non-Owners Insurance: It is the same as rental car insurance, but it is offered for private cars only. For instance, one can buy non-owners insurance for a car that he/she is borrowing from a relative or friend.
Benefits of Having a Short Term Car Insurance Policy
You can choose to buy a short-term car insurance policy for one month, six months, or nine months as per your requirements. In this type of car insurance policy, you comparatively pay a lesser insurance cost every month as compared to an insurance policy with a longer duration. The benefits of having this type of car insurance policy are:
- Instant coverage
- Third-party property damage coverage
- Coverage against injury to third-party
- Accidental damage
- Provides personal accident coverage for the driver
- Gives the option to buy a policy for a minimum of 30 days before its start date
- Duration of coverage can be fully customized
- It provides peace of mind as well
Why and When Should You Buy a Short Term Car Insurance Policy?
Short-term car insurance plans provide insurance coverage against various liabilities such as natural disasters, accidental damages, personal accidents of the driver/owner, etc. The policy also provides insurance coverage against financial losses that incur due to man-made calamities. You can opt for a short-term car insurance policy over a full coverage car insurance plan in some specific situations. These situations are:
- When you are using a rented car.
- When you are learning to drive.
- When you are using a private vehicle after borrowing it from a relative or friend.
- When you want to resell your car soon after its purchase.
- When you have to use a car for a short-term in some other state for travel or business or job.
- If you are a driver who has less experience of driving.
- When you own a car but it is very rarely used.
Wrapping it Up!
Now when you know much about a short-term car insurance policy, you can make good use of this type of monthly car insurance plan for safeguarding your vehicle. This is the best way to avoid financial liabilities when you are using a car in short term. However, you have to keep in mind that this type of car insurance policy is not available with all the vehicle insurance providers. You need to do thorough research to find out an insurance provider that offers a short-term or monthly car insurance policy.
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