Temporary Car Insurance: All You Need to Know!

Posted on: Feb 23, 2024 | 3 mins | Written by: HDFC ERGO Team

Temporary Car Insurance: All You Need to Know!

Most people believe that auto insurance, which offers financial protection in the event of an unfortunate incident, is rigid, especially regarding duration. However, this is far from the truth, insurance companies allow you to tailor your car insurance policy based on your requirements. Temporary car insurance, also known as short-term car insurance, is an example of such a customised insurance plan offering coverage to the policyholder under various circumstances.

What is Temporary Car Insurance?

Four-wheeler insurance coverage in India is primarily of two types, third party car insurance and comprehensive car insurance. The Motor Vehicles Act of 1988 mandates the former to protect the vehicle owner against third-party liabilities caused by an accident. Comprehensive insurance is more exhaustive and offers coverage against third-party liabilities and damages to the insured vehicle. However, both these policies usually have a minimum validity of a year. If someone wants a four-wheeler insurance plan lasting less than 12 months, then temporary insurance coverage is ideal.

Short-term car insurance coverage typically lasts between a few minutes to months. This type of insurance becomes relevant when an individual needs coverage for a fixed period. It could be for relocation, renting a car, learning to drive, and other similar reasons. In contrast, a year-long policy in such situations could be burdensome.

How Does Temporary Car Insurance Work?

Unlike in foreign countries, temporary car insurance is a relatively new concept in India. However, one can research insurance companies that offer such short-term coverage and their conditions. Typically, the following information is required for individuals to buy a temporary car insurance plan:

- Personal details like name, address, occupation, and the like

- Identity proof

- Address proof

- Driving licence, claims history, etc.

- Car details like make and model, engine capacity, seating capacity, etc.

If an unfortunate event affects the insured vehicle, you can claim insurance by following the below steps:

- Contact the insurer within 48 hours of the accident or theft

- File an FIR if it’s a matter of theft or third-party damage

- Submit the necessary documents

After this, an insurer-appointed surveyor assesses the damage caused, and the vehicle gets towed to a garage for repairs. If the car repairs occur at a garage within the insurer’s network, the policyholder can avail of the cashless service. In the event of theft, the policyholder is liable to receive the insured declared value (IDV) if the police submit an untraceable report.

Types of Temporary Car Insurance

Unlike comprehensive car insurance , temporary car insurance has a limited scope of coverage. This type of four-wheeler insurance is mainly of three types:

Rental car insurance

Intended for rental cars, this variety of short-term insurance covers the vehicle against accidental damages, damage from human-made calamities and injury to the driver. A monthly insurance policy is a good option because people generally don’t keep rental cars for too long.

Gap/liability insurance

Gap or liability insurance is suitable for cars acquired through a loan or lease, and a third party must finance the vehicle. Gap insurance coverage gets activated in case of irreparable damage to or total loss of the insured car. The insurance company compensates the policyholder with an amount matching the market value of the vehicle. If the loan amount exceeds the vehicle IDV or market value, the insurer pays the difference.

Non-owner insurance

Non-owner insurance is like rental car insurance but for private cars. This insurance is an apt choice if you plan to borrow a car from a friend or relative and want insurance coverage for the duration the vehicle is with you.

It’s crucial to choose the appropriate plan based on your needs.

Benefits of Temporary Car Insurance

Short-term car insurance offers advantages like:

- Immediate coverage

- Highly customisable policy duration

- More cost-effective than traditional insurance plans

- Third-party injury and property damage coverage

- Accidental damage coverage

- Coverage for the driver against personal accidents

- Can be bought 30 days before the start date

To ensure you get the most bang for your buck, it’s a good idea to know when purchasing temporary car insurance is the best option.

When to Buy Temporary Car Insurance?

Getting a short-term car insurance policy is ideal in specific situations, such as if you:

- Rent a car

- Are learning to drive

- Own a car you barely use

- Are a beginner at driving

- Borrow a car from a relative or friend

- Plan to resell the car soon after purchase

- Wish to use the car in another state for a short duration on grounds of business or travel

Conclusion

Overall, temporary car insurance is the right option to turn to when you need coverage for a short period. However, if your needs differ, weigh the pros and cons of temporary and long-term car insurance before finalising a plan.

Frequently Asked Questions

1) Is there any eligibility criteria to get temporary car insurance?

Yes, there is. You must be between 18 and 25 years old and hold a valid driving licence to buy temporary car insurance. If you plan to borrow a car, the age range changes to 17-30 years. If you’ve just started learning to drive, you must have a valid learner’s licence, and an adult with a permanent driving licence must be present while you use the car.

2) Do I need to inform my existing insurer if I purchase a temporary insurance plan from another company?

No, you don’t need to communicate with your existing insurance company about getting a temporary insurance policy from another insurer.

3) Can I include multiple cars in a temporary car insurance policy?

Yes, you can add multiple cars to a short-term insurance policy. However, this would also increase the policy cost.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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