Do you know that you can suspend, reduce, cancel, or even remove yourself from a car insurance policy temporarily?
You have a car you do not really use – you don’t want to pay for stuff you don’t use at all – and you might be considering how you can ditch your auto policy over it. Or would you rather suspend it meanwhile or cancel the policy outrightly?
To reduce, pause, or cancel your car insurance policy doesn’t take an easy route as you would have done on many subscription-based models. You may not even have so many options open to you regarding your decision to take a break from the vehicle.
If you still put the car on the road occasionally, then, you want to consider keeping it insured to keep you financially secure and also in right standing with the law.
There are a few options you can leverage on as regards your auto insurance.
Reducing Your Car Coverage
If you are not eligible for suspending your car insurance coverage, then you can consider reducing it to avoid cancelling it totally. But first, here are the pros and cons of taking such a move.
- You’ll not have to pay for unnecessary insurance while you are not using your car.
- There will be no coverage lapse that could accelerate your future rates.
- Comprehensive insurance will cover your vehicle over non-driving issues like theft, animal damage, and fire.
- Depends on how much you scale back on your car coverage, but it might become unusable for someone else who wants to drive.
- You may need to retain certain coverage if you still have active car loans.
- You’ll be required to pay for the insurance you keep.
With reduced coverage, you can avoid your insurance break from being referred to as insurance lapse that can lead into some higher rates. But find out with your insurer ahead.
To begin with, you can cut down your auto insurance to the required coverage provided by your state. Almost all states in the U.S. require liability insurance, medical payments coverage and/or personal injury protection, others mandate uninsured/underinsured motorist coverage.
Keep comprehensive insurance – or add it – if you are keeping the car even though you do not drive it and it gets damaged somehow.
Comprehensive insurance will cover for costs resulting from non-driving issues such as vandalism, theft, or any form of damage.
Usually, a collision coverage must be accompanied by a comprehensive coverage, but it depends if your insurer doesn’t make it an exception and allow you to keep only a comprehensive policy, otherwise referred to as ‘car storage insurance’ if you are doing your car storage in the long term. And if you have an active car loan, your loan provider may require that you keep both collision and comprehensive coverage.
You should consider reaching out to your DMV if your insurer permits you to keep comprehensive and cut out others. You may be required to file for an affidavit of non-use because your vehicle lacks sufficient insurance coverage to permit someone else driving it legally.
Coronavirus Related Payment Delays Or Plans
There are several home and auto insurers that are ready to customers who were financially affected by the coronavirus pandemic. But the payment assistance can come in different forms, depending on your state guidelines and auto insurer:
- Special payment plans, including payment delays, depend as a result of financial hardship linked to the recent pandemic.
- Putting cancellations on hold because of nonpayment of premiums.
- Custom payment options on a case-by-case basis.
- Auto insurance refunds with many insurers giving a rebate for the 4th and 5th month in 2020. But note that not all relief options were extended beyond May. Check updates with your insurer.
It is important that you notify your insurance company before your bills are late no matter the company that offers your auto coverage.
Removing Yourself From An Auto Policy
You might want to consider removing yourself temporarily from family car insurance policy instead of changing your coverage. Here are some pros and cons of making such a move.
- The insurance the vehicle needs to drive legally will still be intact.
- You are not likely to have increased future rates from coverage lapse.
- Your vehicle will be covered for non-driving issues like theft, fire outbreak, vandalism, or animal damage.
- Once you have stayed home for at least 30 days, you’ll have to add yourself back on the policy.
- You’ll be required to pay for insurance while away.
This option is worth considering for someone who would be going away, but other members of your family will still be able to keep driving the car.
Taking this method can save you some cash if you’re a riskier driver than the other people that fall into your policy because once you take yourself out, you’ll have reduced the odds of having a crash.
However, if it will not save you money, there are little benefits you’ll get from removing yourself. And it is almost better staying on the policy. It may not be a viable option if you’re not going away and still keep living with other insured drivers on the policy.
Several companies request that all drivers who cohabit in the same location should be listed on a policy or be specifically “excluded.” But an excluded driver doesn’t exactly mean removing yourself from a policy.
Excluded drivers are not to drive a car at all, but when you are simply not listed, you may still drive the car. Excluded drivers will also need to prove that they have other insurance in order to be excluded.
Result Of Suspending Your Car Insurance
When you suspend your car insurance policy, what exactly happens? Many companies do not allow their customers to suspend coverage, or would only permit it on rare occasions.
- You will not have something that could spike up your future rates such as a coverage lapse.
- You will not have to pay for insurance while your car is not in use.
- Drivers who have car loans are often not eligible.
- The car will have no insurance coverage if anyone wants to drive it.
- There will be no insurance covering on the car over non-driving situations like vandalism, theft, fire, and animal damage.
When you suspend a coverage, you typically pause the policy, but don’t cancel it – essentially saves you from possible coverage lapse. Insurance companies rarely permit their customers, except in certain situations, to suspend their coverage.
For instance, you may be suggested to suspend being covered if you are likely to be out of work beyond the payment plan terms or grace-length provided by your insurance company, as a result of the effect of coronavirus. But then, this option leaves you uninsured till you get another job.
You should only consider suspending a policy if you have optional transportation available for you. You may be required to take certain measures such as filing an ‘affidavit of non-use’ from your state’s department of motor vehicles to put required auto-coverage by the state on hold.
This provided document will indicate that the state is aware that your car will not be driven for a specific period of time. But if you have a car loan, suspending your policy shouldn’t be considered.
Most lenders require that you keep policy coverage for issues such as vandalism and theft.
How Do I Cancel My Insurance Policy?
You should best consider cancelling your car coverage for a new policy only when you are putting your car back on the road. Here are the pros and cons of canceling your vehicle insurance policy.
- When your car is not in use, you will no longer pay for insurance.
- Regardless of your insurer, you can cancel your car insurance when you want.
- Once your coverage is canceled, your car will no longer be covered if anyone decides to drive it.
- You may have a coverage lapse that could spike up your future rates.
- There will be no insurance coverage against non-driving situations like theft, fire, vandalism, and animal damage.
- Drivers who have no car loans are not eligible.
Just like suspending your coverage, canceling your car insurance will not work if you have a pending car loan. Your lender will expect some insurance active on your car.
If you are considering canceling your coverage, put a call through to your DMV. Just as coverage suspension, you may be required to submit an affidavit of non-use to take off your car from the road officially and drop the required insurance by the state.
A huge downside to cancel your coverage is the lapse it can create in your insurance history. Drivers who have had coverage gaps created as a result of insurance cancellation – often tagged ‘high-risk drivers’ – may be less open to better rates unlike others who have had continuous insurance.
Ultimately, there’s no all-in-one insurance option that works for everyone best. If you choose to keep your coverage, a solid payment history will help you get competitive rates.