Now is not the time to pay for things you don’t need, and that includes car insurance for an inactive vehicle. You may be thinking about how to get rid of your car policy if you own a car, you never drive, and if it makes more sense to cancel or temporarily suspend the policy.
Setting your car insurance on hold can save you money if you have an unused vehicle. But it is not as easy as stopping your Netflix subscription. Also, your options may be limited depending on why you are taking a break from driving the vehicle or if you have a car loan. If you still use the car, you will want to keep it insured to stay legally and financially protected.
If you experience financial difficulties because you lost your job or did not have a job due to any other reason, financial institutions are likely to be lenient. When it comes to your auto insurance, there are five main options to explore:
- Request a coronavirus-related payment plan or delay.
- Suspend your coverage.
- Cancel your policy.
- Reduce your coverage.
- Withdraw from a policy.
Delays or payment plans related to coronavirus
Several insurance companies are willing to work with clients who are impacted by the pandemic. Depending on your insurance company, payment assistance can take many forms:
- Pause cancellations for non-payment of premiums.
- Special payment plans, including late payments, for financial difficulties related to coronavirus.
- Personalized payment options on a case-by-case basis.
No matter who provides your car insurance coverage, the best you can do is alert the company before your bills are late.
Suspend your auto insurance coverage
Suspending coverage essentially stops your policy, but it will not be canceled. Confirm this with your insurer in advance.
Companies don’t always allow customers to suspend coverage, or can only allow coverage in times like this. If you anticipate being unemployed due to the pandemic for longer than your insurance company’s nominal grace period, then you may choose this option.
However, pausing your insurance coverage temporarily will leave you not eligible to be insured.
Only use this option if there is an alternative mode of transportation available to you. Apply and get an “affidavit of non-use” from your state’s department of motor vehicles to stop the state-required automatic coverage. This document officially informs the state that you will not be driving your car for a specific time.
Suspending your policy is probably not an option if you have a car loan. Lenders generally require you to maintain coverage for issues such as theft and vandalism.
Cancel your policy
You could consider canceling your auto insurance policy and get a new policy when you are ready to drive the car again. However, like the suspension, cancellation, probably will not work if you have a car loan. Your lender will probably want to the least some kind of insurance on the vehicle.
Contact your DMV if you are thinking of canceling. You may need to apply and get an affidavit of non-use of officially take the car out of the insurance required by the state of roads and fall.
The most important disadvantage of cancellation is that it creates a gap in your insurance record. Customers who are continuously insured are the ones generally get better rates than drivers who have coverage gaps, which are generally called “high-risk drivers.”
Cutback your coverage
Reduction of coverage is a good alternative if you are not eligible for suspension and do not want to cancel your policy.
For starters, you can reduce your car insurance coverage required by your state. Almost all states require liability insurance, and others require coverage of uninsured/underinsured motorist, personal injury protection, and/or medical payments coverage.
Consider keeping insurance (or adding) if you are storing the vehicle while not driving, if damaged while stored. Full pay to replace your car in case of theft and issues such as vandalism and damage coverage does not lead to falling objects.
Generally, you must purchase comprehensive coverage along with collision coverage, but your insurer may make an exception and allow you to maintain a comprehensive policy, sometimes known as “car storage insurance,” if you are storing your car long-term. If you have an auto loan, your lender may require you to maintain comprehensive and collision coverage.
If your insurance company keeps you comprehensive coverage and drop everything else, including liability insurance, contact your DMV. You may have to apply and get an affidavit of no use because your car would no longer be safe enough for anyone to legally drive.
Withdrawing your policy
Instead of changing your coverage, you may temporarily withdraw from an insurance policy family car. This option is worth exploring if you are leaving, but others in your home will be driving the car. This option can save you money
if you are a riskier driver than the others on your policy because retiring reduces the chances of a crash. However, if it will not save you money, it is of little benefit to retire, and it is probably more convenient to stay in politics. If you do not leave and continue to live with other drivers insured on the policy, this may not be an option. Many companies require that all drivers listed at the same address be included in a policy or are specifically excluded otherwise.
Withdrawing from politics is not the same as being an excluded driver. If you just don’t figure it out in politics, you can still drive the car. Excluded drivers are not supposed to drive the car, and they can be required to demonstrate that they have other insurance to be excluded.
There is no insurance company or insurance option that works best for everyone. If you choose to keep your coverage, solid payment history should help you get competitive prices in the future.