Now is not the time to pay for unnecessary expenses, such as car insurance on an idle vehicle. You may be wondering how to get rid of your auto insurance if you possess a car you seldom drive — and whether it is better to cancel or suspend the coverage temporarily.
If you have a vehicle that is no longer in use, putting your car insurance on hold can help you save money. But it isn’t as simple as canceling your Netflix account. Furthermore, your alternatives may be limited based on why you’re taking a break from driving the vehicle and whether you have a car loan. If you still use the car, you need to keep it insured to stay legally and financially protected.
If you are enduring financial trouble because you lost your job owing to the coronavirus, insurers and other financial institutions are likely to be understanding.
When it comes to auto insurance, there are five primary alternatives to consider:
- Request a coronavirus-related payment delay or plan.
- Reduce your coverage.
- Suspend your coverage.
- You can remove yourself from a policy.
- Cancel your policy.
Coronavirus-related payment delays or plans
Many auto and home insurers are eager to cooperate with consumers who have been financially impacted by the coronavirus. Depending on your auto insurer and state laws, payment assistance might take several forms:
- Cancellations are being paused owing to unpaid premiums.
- Special payment plans, including delayed payments, are available for those experiencing financial hardship due to the coronavirus.
- Payment alternatives can be tailored to each individual situation.
- Auto insurance reimbursements are available, with most insurers paying at least a rebate for April and May 2020.
Keep in mind that not all relief possibilities were provided after May. Check with your insurer for updates.
Reducing your coverage
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If you are not qualified for suspension, reducing your coverage is a viable option that allows you to avoid canceling your policy. That way, you can probably avoid having your hiatus classified as an insurance lapse, which would result in higher premiums later. Please confirm this with your insurer ahead of time.
To begin, you can cut your auto insurance to meet the minimum requirements.
Almost every state mandates liability insurance, while others require uninsured/underinsured motorist coverage, personal injury protection, and/or medical costs coverage.
If you are storing the vehicle while you are not using it, consider keeping (or adding) comprehensive insurance in case it is damaged while being stored. Comprehensive pays to replace your car if it is stolen, and it also covers non-driving issues like vandalism and damage from falling items.
Normally, you must have comprehensive and collision coverage, but your insurer may make an exception and allow you to keep a comprehensive-only policy, sometimes known as “car storage insurance,” if you are keeping your vehicle for an extended period of time. If you have a car loan, your lender may mandate that you maintain both comprehensive and collision coverage.
If your insurer permits you to keep comprehensive coverage while dropping everything else, including liability insurance, contact your DMV. You may be required to file an affidavit of non-use because your car no longer has enough insurance to be legally driven.
What happens if you suspend your car insurance?
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Suspending coverage essentially pauses but does not cancel your policy, preventing a coverage lapse.
Companies may not usually allow clients to discontinue coverage, and they may only allow it in particular instances. If you expect to be out of work owing to coronavirus for longer than your insurer’s allowed grace period or payment plan terms, the firm may recommend this choice. However, suspending coverage will leave you uninsured while you search for a job.
Only use this option if you have other modes of transportation available. To cancel state-required auto coverage, you may need to file an “affidavit of non-use” with your state’s department of motor vehicles. This document formally notifies the state that you will not be using your vehicle for a specified period of time.
If you have a car loan, you will most likely be unable to suspend your coverage. Lenders typically want you to retain coverage for issues like theft and vandalism.
Removing yourself from the policy
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Instead of changing your coverage, you might temporarily remove yourself from a family car insurance policy. This is an option to consider if you are going away but others in your home will be driving.
This option can save you money if you’re a riskier driver than the other drivers on your policy because it lowers your chances of getting into an accident. However, if it will not save you money, there is little need to remove yourself, and it is probably more convenient to remain on the policy. If you are not leaving and will continue to reside with other drivers insured under the insurance, this may not be an option. Many businesses need all drivers listed at the same address to be included on a policy, or to be explicitly “excluded.”
Removing oneself from the insurance does not imply you are an excluded driver. Even if you are not listed on the policy, you can still drive the car. Excluded drivers are not permitted to drive the car and may be needed to verify they have other insurance in order to be excluded.
How do I cancel my insurance policy?
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When you’re ready to drive again, you might choose to terminate your auto coverage and acquire new insurance. Cancellation, like suspension, is unlikely to be effective if you have a car loan. Your lender will most likely require that you have some type of auto insurance.
If you are considering canceling, contact the local DMV. Similar to a suspension, your state may require you to submit an affidavit of non-use to officially remove the car off the road and drop state-required insurance.
The major disadvantage of canceling is that it causes a gap in your insurance history. Customers who are continuously insured frequently earn better rates than drivers who have coverage gaps and are categorized as “high-risk drivers.”
There is no single insurance plan that works best for everyone. If you opt to keep your coverage, a good payment history should allow you to acquire reasonable rates in the future.
