Car insurance companies offer temporary car insurance for several reasons. The main purpose of temporary car insurance is to make sure that someone is covered while driving without having to purchase a year's worth of insurance.
If a car spends the majority of the year in storage, it does not need to be fully insured because it is not out in traffic. The car will eventually need to be moved and will probably be driven from one location to the other. During the transition time, the driver of the car will need to have insurance for the vehicle. Car insurance companies are able to offer short term temporary car insurance for vehicles that are rarely driven in real traffic conditions. Since the car only needs to be insured for a few days or a few weeks, temporary insurance is a less expensive answer than a traditional insurance policy.
When someone rents a car for a trip that covers more than one state, temporary car insurance can be a valuable asset. Purchasing insurance through the rental agency for an extended trip can be incredibly expensive. If you know that you are going to drive a rented car hundreds or even thousands of miles, you will save money by purchasing a temporary insurance policy. Car insurance companies are happy to have the extra business that is created when customers choose to insure vehicles for a shorter period of time.
Sometimes relatives or friends will visit from out of town and need to borrow a car while they are visiting. A car insurance company will issue temporary coverage for the vehicle that allows the out of town driver to legally operate the vehicle while they are in town. Temporary policies can be purchased for as little as a week or as long as six months. It is less expensive for an insurance company to offer a temporary policy to an out of town visitor than it is for the insurance company to have to pay claims on an accident that involves a driver that is not insured for that vehicle.
Many college students do not take their cars to college with them. Their vehicles generally stay stored at home during the fall and winter until they need them again in the summer. An insurance company can offer temporary car insurance to a college student who only needs to drive for the three months between each school year. Once the student goes off to school again, the insurance policy will lapse. If the student chooses to take the car back to school, the insurance company can offer to convert the policy to a standard one.