Range Rover in Forest

Annual vs Temporary Car Insurance

Perhaps you are trying to decide between car-sharing permanently or buying your own vehicle? Or, maybe you are just interested in learning more about our policies? In this guide, we look at the differences between an annual car insurance policy and temporary car insurance.

What are the differences between annual and temporary car insurance?

Cancellation Rights

Cancelling an annual car insurance policy for whatever reason can be an arduous process that often involves cancellation costs as standard. For those who aren’t certain they’ll need a full year’s use – maybe you are thinking of going travelling and will leave your car at home or perhaps your vehicle is on its last legs – this can be a hard pill to swallow.

However, with a temporary car insurance policy, you are able to cancel your cover at any time and, provided you’ve made no claims and haven’t been involved in any incidents that might give rise to a claim, you can even get your money back on the unused premium.

For learner drivers, our temporary learner driver insurance offers the same perk. So, if you were to pass before your policy elapses, we’ll refund you the difference!

Levels of Cover

You’ll likely know that, when taking out an annual car insurance policy, you choose between varying levels of cover including third party, fire & theft; social, domestic & pleasure and fully comprehensive. You’ll often find a jump in policy price between each level, as the level of cover you receive increases also. Unfortunately, you can’t see into the future and, although it can be more friendly on your wallet to go for a simpler policy, you may end up paying more in the long run if an accident occurs.

When it comes to the temporary policies that we offer at Dayinsure, whether for personal use or business cover, you’ll ALWAYS receive comprehensive cover as standard. Not only does this take out the need to choose between varying levels when taking out the policy, but it also means you know that you are getting the full level of cover available.

READ MORE: Temporary car insurance glossary and jargon buster

No Claims Discount

When you are added to another person’s annual policy and if you were to make a claim on it, not only would this affect your no claims discount but the car owners too. A good no claims discount can make a big difference to the price of an annual policy and so, doing the most to preserve this is essential.

If you choose, instead of being added to an annual policy, to take out a temporary policy instead, the car owners no claims discount will not be affected in the event of an accident. This can help to save the vehicle owner money in the long run.

Young child asleep in car seat

Child Seat Cover

Having a reliable car seat is a must for any parent. Depending on your level of cover, your child seat might not be covered with an annual insurance policy. This is something that is often not included with more basic levels of cover and so you might end up paying more to get your children’s car seats insured.

With a temporary policy, in the event of a claim, any child seats in the vehicle will be replaced whether there is apparent damage or not. We know the last thing anyone wants after an incident is to pay out for a new child seat or worry that the one they’ve currently got might not work properly if another incident occurs.

Quick cover

With the large range of price comparison sites to search and policy details you need to fill in, taking out an annual car insurance policy is no small feat, and you might need to dedicate a good few hours to get the right policy for you for the best price. Especially if you are a new driver, spending time trying to find the most cost-effective policy (and using tricks like adding your parents to your insurance policy to bring the price down) can take a great deal of time.

With temporary car insurance, this time is taken out and you can get straight on the road in as little as 15 minutes. Just enter some simple information and your policy will be started, letting you worry more about the more important things in life.

The differences between annual and temporary car insurance

Annual Car Insurance Temporary Car Insurance
Cancellation: Cancellation fees incur if cancelled before your policy elapses. Cancel at any time and get your money back on unused premium.
Cover Level: Multiple levels to choose from, affecting your policy price. Comprehensive cover as standard.
No Claims: In the event of a claim, the vehicle owner’s no claims discount will be affected. In the event of a claim, the vehicle owner’s no claims discount will NOT be affected.
Child Seats: Might be included, depending on level of insurance cover you choose to take out. Always included, always replaced after a claim even if there is no apparent damage to them.
Application time: Often long application processes and policy comparisons. Cover can start in as little as 15 minutes.


For those who have access to a car but don’t need to use it all of the time, a temporary car insurance policy can not only make a big difference to the cost but can offer some great advantages over an annual policy. From a simple set-up to easy cancellation (and your money back), from the beginning of your policy to the end, you’ll see the benefits.

READ MORE: What are the benefits of temporary car insurance?

For more guides and insurance advice, make sure to visit our help and support page.