In all 50 states, you must carry some form of auto insurance to be considered a legal driver. Auto insurance, however, can be expensive and paying for a longer duration of coverage than you need can be a waste of money. Fortunately, you can avoid paying for coverage you will not use.
If you wish to buy a 30-day auto insurance, start by asking for such a policy from the major insurance companies. Standard insurance policies cover a longer duration, such as three six or 12 months. However, insurers are free to offer shorter term policies if they choose. One common instance when insurers offer far shorter coverage is car rentals, where the policy can cover only a few days. The best insurance firms to talk to for such a customized policy are those with which you have an existing relationship, as they are the most eager to satisfy you. So, ask the insurer of your home, office or your life insurance underwriter for a 30-day auto insurance policy.
Make Monthly Payments
Even if insurers who offer coverage in your state do not offer a 30-day policy, many will give you the option to pay for coverage in monthly installments. Even if the policy is for six months, you can make monthly payments for as long as you wish to keep the coverage. If you need to be covered for only a month, you can call your insurer after 30 days and cancel the policy. This way you would not need to make additional payments and the total cost may even be lower than a customized one-month policy.
Cancel for Refund
An additional option that allows you to pay for only one month's coverage is to buy a long-term policy that requires a substantial upfront payment and then cancel the policy when you no longer need it. For instance, a six-month policy may cost $900 and require three payments of $300 each. One month of coverage will therefore cost you $150. If you cancel the policy one month after paying the first installment of $300, you should get $150 back. The refund of $150 will be for the second month of coverage that you will not use. Before you elect this strategy, however, read the fine print on your insurance documents and ask the insurer if you cancel at any time for a full refund of the unused portion on your prepaid coverage.
Don't Drive Uninsured
Regardless of how you chose to pay for only one month of coverage, make sure that you carry the minimum required coverage for as long as mandated by your state law. Most states require you to carry insurance for as long as your vehicle has an active registration. Violating the applicable law can result in heavy fines. When in doubt, extend your coverage until you get a clear answer regarding when you can legally terminate your policy. It is far cheaper to pay for a few more days or even weeks of coverage than to pay a hefty fine.
Hunkar Ozyasar is the former high-yield bond strategist for Deutsche Bank. He has been quoted in publications including "Financial Times" and the "Wall Street Journal." His book, "When Time Management Fails," is published in 12 countries while Ozyasar’s finance articles are featured on Nikkei, Japan’s premier financial news service. He holds a Master of Business Administration from Kellogg Graduate School.