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UPDATED: Mar 13, 2020
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When you’re going out of town for an extended period of time or you’re living between states, it’s only natural to put things like your cable service or your newspaper delivery on hold.
You don’t need cable, the internet, home phone, newspaper, or other services that are tied to your address when you’re not physically there. The same goes when you’re not going to be using your car for a long period of time.
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It’s already frustrating enough that you have to pay premiums for coverage that you hope you’ll never need. Now, picture yourself paying premiums for a car that’s been parked for months on end and that you don’t intend on using in the near future.
If you find yourself in a situation like this, here’s what you can do to put your coverage on hold.
Coverage While Your Term Is Active
There’s no point in paying for auto insurance if it’s not going to protect you when you need it.
When you’re building your auto insurance portfolio, you need to select the coverage that you’re going to want to lean on when it comes time to file a claim. That’s why you need to compare all of the coverage offerings before you sit down and buy a plan.
After you’ve built your policy and you’ve applied, your coverage will remain in effect for as long as the policy is active.
You might have to skim through your exclusions and review the carrier’s expectations of you as a policyholder, but as long as you’re paying the premiums and following the rules, you’ll have protection during your term.
What happens if you don’t pay your premiums?
If you don’t pay your policy premiums by the time that they’re due, it puts you in a bad position. By law, not all insurance companies have to give you extra time to pay your premiums.
When a premium isn’t paid by the due date (or by the end of the grace period), the policy will cancel and you won’t have any coverage during that time frame.
If you let your policy lapse for non-payment, the consequences are greater than just not having coverage. It’s bad enough that you won’t have protection if you’re driving, but you might have to answer in a court of law as well.
Deciding to let your policy lapse could result in the following:
- Suspension of your registration and/or license
- Assessment of fees and fines for having a suspended registration
- Impoundment if the vehicle is being driven or parked on public property
- Misdemeanor violations if you’re caught driving the car without insurance
- Increased cost for insurance in the future for letting a policy lapse for non-payment
- A larger down payment for a new auto policy when you’ve been without insurance in the past three years
Do insurance companies let you put the coverage on hold?
It might seem easier to just let your insurance cancel when you don’t need the coverage for an extended amount of time but that decision puts you at risk.
It will wind up costing you more if you let the policy cancel and you don’t take the appropriate steps to let the state know that you’re not driving your car.
Most insurance companies have a special provision that allows their clients to put their current insurance on hold. This is a popular provision with companies that target military customers because they are often deployed.
Most of the time, putting your insurance on hold is called suspending the policy.
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Make Sure to Time Your Suspension Right
If you’re dealing with an agent who has your best interest in mind, they will inform you that you need to turn in your plates or at least change your registration to reflect that the car isn’t being operated.
Surrendering your plates or filing the car as a Planned Non-Op is a step that has to be taken before you suspend your insurance. If you don’t take this step, the state will fine you just like an uninsured motorist is fined.
Surrendering your plates will require a trip to the DMV. It’s basically the step that’s taken to show the DMV that you’re not going to be taking your vehicle out on public roads so it doesn’t need tags.
You can’t just drop the plates off, you’ll have to fill out a new application showing that you understand the legalities of surrendering a registration.
Should you keep your coverage?
You don’t always have to suspend your whole policy. If you still want to have some peace of mind that you won’t be without a car if it catches fire while it’s sitting there, ask to keep your comprehensive coverage.
Your other coverage options, like Bodily Injury, Property Damage, Collision, and Medical Payments, will all be suspended but you’ll have protection for the parked car.
If your car is in need of repair or you’re taking a break from driving, it might sound like the best decision would be to cancel the coverage altogether.
For the time being, it’s easier to just cancel your insurance and not worry about anything. Unfortunately, if you do this, you’ll be out of money when you buy new coverage.
If you simply put your policy on hold, you will still enjoy prior insurance discounts. You also won’t be charged a penalty for having a lapse of coverage. Call your agent to suspend your coverage as soon as you have everything done with the DMV.
When you are ready to activate your insurance again, call your agent. If you’re tempted to see if you can find a better deal, use our online comparison tool and compare the rate to what you’re paying.