A few years ago the insurance industry finally waved goodbye to the 18th-century and short term car insurance was born. Since then it has become one of the most popular products on the market with many thousands of people seeking quotations every week. So what is it, and how does it work?

Whereas in the distant dusty days it was taken for granted that every car insurance policy should last for a year, the advent of computer and the Internet have together made it possible for insurers to not only instantly work quotations for unusual policies, but to accept payment and issue those policies automatically, too. Changes in litigation have also made it possible for policies to be issued for very short lengths of time; the minimum is just a single day anda policy can run right up to much as four weeks. Arranging the insurance is extremely easy; everything is done online so all you need to do is to visit a short term car insurance website, pick the length of time you wish to have cover for, decide on whether to go for fully comprehensive or third party only cover, and you are almost there. Fill in your credit card details and as soon as the transaction is completed, which should only take 5 min or so, you can download your documents and cover can start straightaway, or at a date and time in the near future. What could possibly be more convenient than that?

Short-term policies have proved extremely popular and they have many uses. It is possible to insure a car which belongs to you, and also to ensure one which belongs to someone else so you can use it for purposes as diverse as test driving a vehicle you are considering buying, to borrowing a friend's car for a couple of weeks for a driving holiday.

You may on the other hand wish to have cover for a vehicle for more than four weeks, and sadly under current litigation you cannot extend a short term car insurance policy of this type or take out another one straight after it has ended but there is another type of cover known as a month to month policy which has a minimum length of one calendar month, and a maximum of eight months. This type of policy is taken out on a rolling basis; initially it lasts for a month, but is renewed automatically at the end of each month. If the buyer wishes to cancel the policy this can be done at any time, but a minimum of two weeks notice is necessary otherwise the policy will be renewed automatically for another month. This type of policy is very useful for those who simply do not know how long they will need insurance for, because it has the flexibility that a standard yearly policy does not have. It is not, however, intended to replace standard insurance; although it is an economic way viable proposition to take it out for the odd few months it can get a little expensive if it is used for a long period of time, so it is sensible to take a hard look at other alternatives if you expect to be in need of cover for more than, say, six months.