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UPDATED: Mar 13, 2020
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Most people mistakenly believe that they only need car insurance when they’ll be driving a vehicle.
Although you’ll only be held legally responsible for damages in an accident when you’re driving your car, the reality is that you’re still obligated to insure your car in other situations.
In the past, there was almost no way to tell when a car was covered or not, but nowadays, more states are implementing digital systems that can easily tell a parking agent whether a car is in compliance with local ordinances.
Every city has its own rules on where guests and residents are allowed to park and how long you can keep your vehicle in one place without moving it.
Although many communities and neighborhoods have an unspoken parking rule, some people are surprised to learn that the parking spot in front of their homes belongs to the city, not them.
When you park on a street, whether in a residential or urban area, you are required to have some type of insurance coverage on that vehicle.
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When You Need Insurance on a Parked Car
You can park on your own private property without needing insurance coverage on your vehicle.
When you park on a city- or municipality-owned road, however, you must have coverage and a valid registration for the car.
Registration acts as a form of identification for your vehicle. It allows law enforcement officials and other entities to easily locate the car’s owner in order to send tickets, if necessary, and verify that the car can legally be on the road.
Each state has its own parking ordinances, but all cars must be registered in order to park on public roads.
It’s perfectly acceptable to park an unregistered car in your own driveway, in a storage facility or in a private yard, but if it’s not registered, you can’t park it in parking lots, on streets or other areas where cars continuously come and go.
By the same token, some states have stricter requirements than others regarding registration and parking.
Instead of requiring only registration, highly populated states and those with too many registered vehicles are considering banning out-of-state plates, meaning that non-residents will not be allowed to park on the street.
In other words, out-of-state vehicles, although registered, are treated as though they have no valid registration whatsoever.
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When You Need Evidence of Financial Responsibility
Most city ordinances do not come out and say that your car must be insured in order to legally park on the street. If you understand mandatory insurance rules or financial responsibility laws, it becomes easy to see how the following relate to each other:
Check with your state to determine the liability insurance laws by which you are bound.
Some states allow you to get away without purchasing insurance as long as you file for a self-insurance certificate, but most people choose to purchase insurance coverage through a licensed provider.
In other words, the only way you won’t need to buy insurance (assuming your plates are valid) is by placing a deposit as large as $30,000 or by buying a bond. This is to show the state that you will be financially responsible for the bodily injuries or damages you could cause.
Think of it like a cycle. You need to insure your car to register your vehicle. Your vehicle must be registered to park on the street. Your car must be insured in order to be registered. Some of the penalties for failing to insure your car include:
- Citation fines
- Storage and towing fees
- Vehicle impoundment
- Loss of driving privileges
- Suspended registration
Yes, the DMV Will Find Out
If you can’t provide evidence of insurance coverage for your car, you’ll lose your registration. Some people may wonder how the municipality can find out if you don’t have coverage.
In the past, many drivers let their insurance policies lapse after they registered their vehicles, but now, more cities are turning to digital verification systems.
Electronic verification systems help to ensure that all vehicles are registered and insured as required by law. Each state has its own regulations that require insurance companies who offer products to consumers to report specific changes right away, including:
- Non-renewal of insurance
- Voluntary cancellation request
- Failure to pay cancellation
- Activation of new coverage
If the insurance policy lapses, the car owner receives a notice requesting that he or she provide evidence of valid coverage. If he or she fails to do so within 14 to 30 days, the vehicle’s plates are suspended.
Then, should a parking enforcement agent run the plates, the system will indicate that they are not active, and the vehicle will be towed.
Follow the Rules at All Costs
If you’ll be parking your car and not driving it for some time, it might be tempting to save the money you would’ve spent on insurance.
However, if you’re caught, you’ll face numerous headaches and major hassles.
Instead, ask your insurance provider about “parked insurance,” or the removal of liability coverage from your policy, which allows you to pay a reduced premium in exchange for the ability to legally park your vehicle.
This way, you’ll have limited coverage in the event of an incident, but you will still save money as you won’t be paying for full coverage on the car.
If you choose to purchase comprehensive coverage, as the name implies, damages to your parked car will be covered by most insurance companies, including:
Above all, it’s important to check your state’s minimum coverage laws in order to protect your vehicle while it is parked, not only to stay compliant with local laws and regulations but also to cover yourself in the event of an adverse event.
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