Buying No-Contract Auto Insurance: What You Need To Know in 2024
No-contract auto insurance is often called month-to-month auto insurance or short-term auto insurance. Assurance, Esurance, and Progressive carry temporary auto insurance policies.
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Jimmy McMillan
Licensed Insurance Agent
Jimmy McMillan is an entrepreneur and the founder of HeartLifeInsurance.com, an independent insurance brokerage. His company specializes in insurance for people with heart problems. He knows personally how difficult it is to secure health and life insurance after a heart attack. Jimmy is a licensed insurance agent from coast to coast who has been featured on ValientCEO and the podcast Modern Li...
Licensed Insurance Agent
UPDATED: Aug 26, 2024
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Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our auto insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different auto insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Aug 26, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our auto insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different auto insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
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A Concise Overview
- No-contract auto insurance is short-term auto insurance that lasts for one month
- Temporary auto insurance is necessary if a policy is canceled or an insurance company liquidates
- Short-term auto insurance ends when you stop paying
Major auto insurance companies require customers to enter a six-month or 12-month contract. However, some companies offer no-contract auto insurance or month-to-month auto insurance.
What are the benefits of no-contract auto insurance? Is no-contract car insurance the same as monthly car insurance? How do you find the best rates on a no-contract plan? These are great questions to ask, especially if you’re someone who wants to pay month by month for car insurance.
Continue reading to learn how no-contract car insurance works and how to buy auto insurance for a short period of time.
How can you save money with no-contract auto insurance? Enter your ZIP code in our free comparison tool to see what companies in your local area offer no-contract auto insurance.
What is no-contract auto insurance?
How does no-contract auto insurance work? No-contract auto insurance is insurance with no strings attached, which lasts for one month. No-contract auto insurance is known as short-term auto insurance or month-to-month auto insurance.
California Department of Insurance calls short-term auto insurance a “binder.”
A “binder” is a short-term agreement that provides temporary auto coverage, but is usually a precursor to a full policy while it’s in underwriting. Temporary auto insurance is necessary if an auto insurance policy cancels or if an insurance company liquidates. Most of the time, customers are looking for cheap auto insurance options and wish to switch companies.
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Can you get six-month auto insurance?
The shortest term for big insurance companies is six months. Six-month policies are halved annual rates. Customers can renew their policies or pick another auto insurance company. Before you purchase an auto insurance policy, you’ll choose between a six-month policy or a 12-month policy. According to the Insurance Information Institute, most auto insurance policies last six months to a year.
What is the cheapest online car insurance?
So who offers the cheapest car insurance? Cheap car insurance depends on several factors that determine coverage. The fastest way to get an auto insurance policy is to get auto insurance online. You can get car insurance quotes almost instantly. But which company offers affordable auto insurance? Here are some annual rates from the top-10 auto insurance companies in the United States.
Average Auto Insurance Rates of the Top 10 Auto Insurance Companies
| Companies | Average Annual Rates | Average Six-Month Rates | Average Monthly Rates |
|---|---|---|---|
| Allstate | $4,898 | $2,449 | $408 |
| American Family | $3,443 | $1,722 | $287 |
| Farmers | $4,189 | $2,094 | $349 |
| Geico | $3,216 | $1,608 | $268 |
| Liberty Mutual | $6,096 | $3,048 | $508 |
| Nationwide | $3,447 | $1,723 | $287 |
| Progressive | $4,044 | $2,022 | $337 |
| State Farm | $3,268 | $1,634 | $272 |
| Travelers | $4,445 | $2,222 | $370 |
| USAA | $2,542 | $1,271 | $212 |
Read more: Buying Annual Auto Insurance: What You Need To Know
Six-month rates are half of the annual rate. USAA, Geico, and State Farm are the cheapest auto insurance companies.
Do major companies like Geico offer temporary auto insurance? It’s possible. You’ll need to contact a Geico insurance agent to get your answer. Some services aren’t advertised on television or on websites. Auto insurance agents at the company can connect you to other services.
Can you cancel your insurance policy at any time?
Yes. You can cancel whenever you want. No-contract auto insurance makes it easier for you to cancel auto insurance. Short-term auto insurance ends when you stop paying, or when you tell the auto insurance company that you’re moving on.
Standard auto insurance policies may come with a cancellation fee of $25 or more. Some companies may issue something called a short-rate fee. According to New York’s state law, a short-rate fee is calculating the return rate on a policy. Sometimes that rate could be 10 percent of the remaining policy balance.
This is what makes shorter term policies fairly popular. Prices change, circumstances become different than when a driver first signed up with a company, and so they may want to look elsewhere. There are some comforts that come with buying a full year, but that isn’t always the case.
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How much is insurance a month for a 17-year-old?
According to the National Highway Traffic Safety Administration (NHTSA), teen drivers have a higher rate of encountering fatal crashes. Teens are statistically more likely to get in an accident. Auto insurance companies issue higher than average auto insurance rates. Let’s look at auto insurance rates based on age, gender, and marital status.
Average Annual Auto Insurance Rates by Age, Gender, and Marital Status
| Companies | Single 17-Year-Old Female Rates | Single 17-Year-Old Male Rates | Single 25-Year-Old Female Rates | Single 25-Year-Old Male Rates | Married 35-Year-Old Female Rates | Married 35-Year-Old Male Rates | Married 60-Year-Old Female Rates | Married 60-Year-Old Male Rates |
|---|---|---|---|---|---|---|---|---|
| USAA | $4,808 | $5,386 | $1,989 | $2,126 | $1,551 | $1,540 | $1,450 | $1,449 |
| Geico | $5,654 | $6,279 | $2,379 | $2,263 | $2,303 | $2,312 | $2,241 | $2,283 |
| Nationwide | $5,756 | $7,175 | $2,686 | $2,889 | $2,360 | $2,387 | $2,130 | $2,215 |
| State Farm | $5,954 | $7,324 | $2,336 | $2,555 | $2,082 | $2,082 | $1,874 | $1,874 |
| American Family | $5,997 | $8,131 | $2,289 | $2,695 | $2,203 | $2,224 | $1,993 | $2,014 |
| Farmers | $8,522 | $9,144 | $2,947 | $3,041 | $2,557 | $2,558 | $2,337 | $2,448 |
| Progressive | $8,690 | $9,625 | $2,698 | $2,759 | $2,297 | $2,175 | $1,991 | $2,049 |
| Allstate | $9,282 | $10,643 | $3,425 | $3,571 | $3,156 | $3,123 | $2,913 | $2,991 |
| Travelers | $9,307 | $12,851 | $2,325 | $2,491 | $2,179 | $2,200 | $2,052 | $2,074 |
| Liberty Mutual | $11,621 | $13,719 | $3,960 | $4,503 | $3,803 | $3,857 | $3,445 | $3,681 |
Other drivers pay much less for auto insurance, but teen drivers pay thousands more. Parents who insure teen drivers need non-owner car insurance. Take advantage of policy discounts to cut expensive teen auto insurance.
How can I get non-owners insurance?
If you have a teenage driver and need to add non-owner auto insurance, your insurance agent should be able to help you out.
Can you insure a car for just one month?
How does monthly auto insurance work? Month-to-month insurance allows you to pay for auto insurance without having a contract. Active service depends on whether you’re making the monthly payments. You may not get the same perks as standard auto insurance.
What companies offer no-contract auto insurance? Only certain companies. Assurance, Esurance, and Progressive carry temporary auto insurance policies. (For more information, read our “Esurance Auto Insurance Review: Should you buy?“).
Make sure the auto insurance policy doesn’t have any cancellation fees. Georgia’s state law requires drivers to cancel vehicle registration before they cancel auto insurance.
Should you compare rates on regular car insurance instead of temporary no-contract coverage? Absolutely, and we can help. Start shopping for auto insurance in your local area now with our FREE comparison tool. Enter your ZIP code now.
Frequently Asked Questions
What is no-contract auto insurance?
No-contract auto insurance, also known as pay-as-you-go or usage-based insurance, is a type of auto insurance that does not require a long-term contract. Instead, it offers flexibility by allowing you to purchase coverage for a specific period or based on your actual usage of the vehicle.
How does no-contract auto insurance work?
No-contract auto insurance typically involves the use of telematics technology, such as a mobile app or a device installed in your vehicle, to track your driving behavior and mileage. The insurance company uses this data to calculate your insurance premiums, which may vary based on factors like distance driven, time of day, speed, and braking patterns.
What are the advantages of Buying No-Contract Auto Insurance?
Buying no-contract auto insurance offers several advantages, including:
- Flexibility: You have the freedom to purchase coverage for a shorter period, such as a day, week, or month, or even for specific usage, such as when you are borrowing a friend’s car or renting a vehicle.
- Cost savings: No-contract auto insurance can be more cost-effective for infrequent or low-mileage drivers who don’t need traditional annual policies. You only pay for the coverage you actually use, potentially resulting in lower premiums.
- Personalized premiums: With telematics data, your premiums can be based on your individual driving habits and patterns. Safe and responsible drivers may be eligible for discounts or lower rates.
- Easy management: Many no-contract auto insurance providers offer user-friendly mobile apps or online platforms that allow you to manage your policy, make payments, and access your insurance documents conveniently.
Are there any downsides to Buying No-Contract Auto Insurance?
While no-contract auto insurance has its benefits, it’s important to consider potential downsides:
- Limited coverage options: No-contract auto insurance may offer limited coverage options compared to traditional auto insurance policies. It’s essential to ensure that the coverage provided meets your specific needs and offers adequate protection.
- Data privacy concerns: Since no-contract auto insurance relies on tracking and collecting driving data, some individuals may have concerns about privacy. Be sure to review the insurance company’s data collection and usage policies to understand how your information is protected.
- Potential premium fluctuations: With usage-based insurance, your premiums may fluctuate based on your driving behavior. If your driving habits change significantly, it could impact the cost of your coverage.
How can I buy no-contract auto insurance?
To buy no-contract auto insurance, follow these general steps:
- Research providers: Look for insurance companies that offer no-contract or pay-as-you-go auto insurance. Compare their coverage options, pricing, and customer reviews to find a reputable provider.
- Understand the terms: Review the policy terms, including the coverage offered, the duration of coverage, the data collection methods, and the pricing structure. Ensure you understand how premiums are calculated and any additional fees or conditions associated with the policy.
- Install tracking device or app: If required, install any necessary telematics devices or mobile apps provided by the insurance company to track your driving behavior and mileage accurately.
- Provide required information: Fill out the necessary forms, provide accurate information about yourself, your vehicle, and your driving history as requested by the insurance provider.
- Purchase coverage: Once you’ve completed the necessary steps, you can purchase the coverage for the desired period or usage. Pay the premiums as specified by the insurance company.
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Jimmy McMillan
Licensed Insurance Agent
Jimmy McMillan is an entrepreneur and the founder of HeartLifeInsurance.com, an independent insurance brokerage. His company specializes in insurance for people with heart problems. He knows personally how difficult it is to secure health and life insurance after a heart attack. Jimmy is a licensed insurance agent from coast to coast who has been featured on ValientCEO and the podcast Modern Li...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.