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If you have a car that doesn’t run and it’s on a high-deductible policy, you may want to postpone repairs, especially if they are going to be costly. You may choose to leave your car in its present state and not use it for a while. Since it will be in your garage, you may be thinking about dropping your car insurance. Would it be a wise decision on your part? The answer will depend on your present circumstances. Here are some factors that can affect your decision:
You Have Multiple Cars on One Policy
Let’s say that you own a policy that covers several cars. When one of the vehicles needs repairs, there is no need for you to insure this particular car, especially if you are not planning to use it. Note, however, that you should still think hard about dropping it if the existing policy includes protection from fire, flood, theft, and other damages that can arise when the car is not driven. Canceling your coverage can be a risky choice.
It would also be best to check with your state if they have laws about insurance for registered cars.
You Only Have One Car
If you only have one car in the family and you highly depend on it for your mobility, then it would be wise to maintain your car insurance. The best way to reduce the costs of your insurance is to check how long the repair will take and have your provider reduce the coverage until your car is fixed and ready to take on the road.
You Have an Outstanding Auto Loan
If you are still paying your car loan, then you have no choice but to maintain your car insurance. You have to understand that financial institutions want to secure their investment. Their thinking is that cars, even when not in use, can still be vulnerable to damage or theft. There may be some instances where financial institutions get third-party car insurance and ask you to reimburse them but this is not a cost-effective option for you.
According to Allstate auto insurance, car owners can choose to convert their current car insurance to storage or comprehensive-only insurance. This type of insurance covers you if you need to pay for repairs that arise from theft, fire, or storm - all scenarios that can still happen even if the car is unused or in storage. This choice would allow you to lower your car insurance policy cost significantly. It also helps to keep your coverage updated, so you never have to worry about paying higher fees for lapsed coverage.
If you are planning to change your auto insurance coverage to comprehensive only, then you will need to see if you qualify. In general, insurers will require that your car is in storage for at least 30 days. You cannot drive your vehicle out even for a short distance since you are dropping your liability coverage. You wouldn’t have any protection should you get into an accident, and you would be violating state laws.
Is it a wise choice to drop car insurance if you are not planning to use your car for a while? The answer is no. It would actually be more cost-effective on your part to have car insurance that would protect you and your vehicle from any damage. You also have to understand that a gap in your car insurance can make you high-risk, and insurance providers may charge you a higher premium the next time you apply for coverage.