Can You Buy Motorcycle Insurance For 1 Month?

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   Terry A. McCarthy, CLU, ChFC

   President, Insurance Associates Agency Inc., West Chester, OH

   Would you buy that coverage if they charged you the equivalent of six months premium? Issuing a policy for a month is as expensive as issuing coverage for a year. The cost of insurance is calculated using an assumption that the policy will last the length of the term, be it six months or a year. That is why a "short-rate" table exists to calculate the premium earned when a policy is cancelled before the end of the policy term. A short rate is recognition of the administrative burden and the cost is passed along in the premium you are charged. You can buy a policy on a six month term or for a year and then just cancel it but don't expect the actual cost for a month of insurance to be equal to 1/6th of 1/12th of the premium. It is likely to be much higher. But it is possible to end up with coverage for one month. You just may not like the premium charge when you're done with the coverage.

   Answered on February 2, 2015

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