Is Temporary Car Insurance Worth It For Retirees?

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If you’re retired, you may drive less often than you once did.

Perhaps you only use your car for the occasional errand across town. Maybe you own a vacation home and only drive on a seasonal basis. Whatever the case, a temporary car insurance policy may seem like the logical answer to obtaining coverage when you need it so you can drive legally.

However, true temporary car insurance is hard to find because most insurers only offer policies with six- or 12-month terms. One of the few carriers that does sell this kind of coverage is Hugo Insurance. Hugo offers liability and full car insurance coverage by the day, week, or month. 

You can download the app, apply for coverage and purchase the policy you want. Users must purchase at least three days of coverage to start, then can add money to extend coverage as needed.

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Policy management, including paying your premium or canceling coverage, is handled through an app; there are no local agents. Hugo is only available in 13 states, mostly in the southeastern U.S. Arizona-based Just Insure is another digital insurer that offers coverage on a temporary basis, but it’s only open to residents of that state.

A person takes a photo of a damaged car bumper. 

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What kinds of temporary car insurance can I buy?

Although true temporary car insurance is difficult to find, most major carriers do offer policies that can provide coverage on an as-needed basis, the most common of which include:

• Pay-as-you-go insurance. Hugo falls into this unusual, innovative category of car insurance, where you pay for insurance when and as you need it.
• Rental car insurance. Retirees who only drive rental cars on vacation or at other times can purchase insurance directly from the rental company to cover them for the period they have the vehicle.
• Added as a driver on someone else’s policy. In some situations, retirees can be temporarily added as a driver on another person’s policy, such as an adult child’s, if they are going to be driving their car for a period of time. Usually, coverage can only be extended to immediate family members living under the same roof. If you occasionally drive someone else’s car, their insurance will cover you as a permissive user.

If you drive infrequently but want the peace of mind of having car insurance year-round, consider these options:

• Pay-per-mile insurance. A pay-per-mile policy may be best if you drive fewer than 8,000 to 10,000 miles a year, depending on the carrier. Before you sign up, Peterson says, look carefully at the policy charges. Some have a hefty monthly base rate and a small per-mile charge, making them more like a standard insurance policy. Others have a low monthly fee but charge more per mile. Allstate, Metromile, Mile Auto, and Nationwide all offer this type of insurance.
• Non-owner car insurance. Non-owner car insurance can be an inexpensive option for retirees who don’t have their own vehicle but may borrow one occasionally from family or friends. However, non-owner car insurance only provides liability protection. If you get in a wreck while borrowing a car, the owner must have comprehensive and collision insurance to pay for any damage to their vehicle.

A man is shown looking at his phone while sitting in a car with airbag deployed.

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Can I suspend my auto insurance policy temporarily?

No, you can’t suspend your policy, but you can sometimes reduce your coverage to comprehensive only if you will not be driving the car for a while. Insurers refer to this as storage or lay-up coverage. It could be an option if, for example, you’re retired and your primary residence is in New York City, where you rely on public transit, but you relocate to a second home in Florida for the winter and drive while living there.

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“[Your insurance company] can take off collision coverage if you are not driving,” says Colleen Parsons, a New York-based client advisor with World Insurance Associates. Liability insurance is typically also removed, but comprehensive insurance, which can protect your vehicle from theft, fire, and other non-collision events that an unused car may be vulnerable to, is maintained.

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In some states, you also may need to get an affidavit of non-use from the Department of Motor Vehicles, which will then suspend or cancel your car registration until otherwise notified.

The advantage to putting a policy on lay-up is that you will continue to be insured, thus avoiding any lapse-of-coverage penalties. The drawback is that you may forget to reinstate the insurance when you begin driving again. If you are in an accident, the loss won’t be covered, and if you are pulled over without insurance, you could face a ticket and fine. Plus, if you are required to file a non-use affidavit, there could be a reinstatement fee when you begin driving again.

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