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Carrying insurance coverage is usually necessary for any vehicle, especially one that is used on the road. There may be times, however, that it seems to make sense to remove your coverage or cancel your coverage if your vehicle is not in use, sitting in storage, or is removed from the road for some other reason.
While pausing or canceling your car’s primary coverage may seem like a good idea, there are several key considerations before you completely remove any coverage.
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Should you avoid a gap in insurance coverage?
One of the first things to consider is your insurance history, which is something that any future insurance provider will look at. Having gaps of time without active insurance on a vehicle can be a red flag to many providers, often making it harder to obtain the coverage you want.
Additionally, gaps in coverage could indicate a higher risk, which could lead to higher premiums when you do purchase a new policy.
Multiple gaps in insurance coverage may also prevent a traditional insurance provider from issuing coverage, as they may be unwilling to insure a higher risk driver or vehicle. While this is only a single factor providers look at, it is one they really consider when assessing your risk.
If this is the case, you might have to purchase coverage from a state minimum insurance provider — often at a higher premium than a traditional provider.
The longer the gap, the greater the risk you are taking. If you do not have any coverage in force when there is damage or an accident that occurs, then you would be solely responsible for any financial penalties.
If you are considering canceling your policy, consider looking into storage coverage or other, non-traditional coverage options through your provider. If your provider is unable to provide such a service, other specialized providers may insure your vehicle and reduce your risk exposure.
Do you plan to take your car on the road and off the road often?
Another thing to consider is how often you anticipate your car will be on the road and off the road. It may seem financially savvy to remove coverage for a month if your car is garaged, but you will have to reinstate coverage as soon as you realize you will be using the car.
It would be financially risky and may also be illegal to start driving your car without having an active insurance policy on it.
If you are planning to use the car on and off the road often, then it may make sense to leave your coverage active. Your insurance provider can discuss other options that may be available once you explain how you plan to use the vehicle.
Does your car have value?
Insurance providers often determine value differently than the car’s owner determines value. When trying to determine if your car has value, it’s important to take things like repair costs, replacement costs, and current market value into account.
Additionally, it may be worth keeping your insurance active if your car is going to be off the road for only a short amount of time.
For example, if you are working on completing repairs to your vehicle for a month, then you may still want to have active coverage. There are other options, such as storage coverage, that may be able to provide coverage while your car is off the road.
Storage Coverage is normally just comprehensive coverage — protecting your vehicle from damages other than those covered by collision. If you’re curious if this coverage is available for you, or if it’s right for your needs, your insurance provider can discuss this coverage and any available options with you.
Is your car a classic or unique car?
There are several vehicles that meet the definition of a unique or classic car, and these vehicles often need special policies that are designed to meet the needs of a unique or classic vehicle. Classic cars are just one example of a car that needs a special policy, and their value is often more than the typical car people use on a daily basis.
While classic cars are often the most common example of a higher value car, there are several different types of unique vehicles that may need insurance when they’re off the road.
Luxury vehicles, exotic vehicles, and imported vehicles all fall into this category, and these cars may need insurance at all times to help cover unique exposure risks — such as higher repair or replacement costs.
Your insurance provider can help you determine if this coverage type is right for you.
Choosing the Right Coverage
Having active insurance coverage for your car is important. There are times where pausing or canceling your coverage may seem like a great idea, but there are several things to ask yourself before making a final decision. You should consider several factors:
- Your car’s value
- The type of car you own
- The amount of risk you will be responsible for
- The length of time your car will be off the road
- Your insurance provider’s policies are all factors to consider
If you are unsure of what steps you should take, or just have questions about your available options, speak to your insurance provider. They can help you assess the risk associated with pausing or canceling your coverage, and they can also discuss any other available coverage options.
Also, don’t forget to get several quotes to compare rates. Enter your zip code below in our FREE comparison tool to get started!