SHOULD I PAUSE OR CANCEL AUTO INSURANCE?

26 July 3 MINS READ
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If you own a vehicle, auto insurance is likely something that you’ve been paying for every month. Canceling or suspending car insurance became more common during quarantine with people working remotely and not needing to commute or even drive as much as they used to. Some drivers found that they’d rather suspend their insurance than have a record of non-payment.

As the average household has nearly two cars, can you keep one in storage, and save money by canceling the car insurance until you need it again? If you're not planning on driving your car for an extended period of time can you hold your insurance temporarily?

Let's see.

WHAT IS THE DIFFERENCE BETWEEN CANCELING AND SUSPENDING COVERAGE?

With canceling, you have no coverage at all and will have a lapse in coverage that can cause increased premiums if you need car insurance down the line. But if you suspend, you get to pause your coverage and avoid a lapse in coverage.

SHOULD I PAUSE MY AUTO INSURANCE?

Because insurance is required in most states, you cannot legally put your insurance policy on hold. But most car insurance companies realize that drivers aren’t using their vehicles every single day due to some lifestyle changes that might necessitate that they suspend their auto policy.

So depending on your situation, you may be able to pause your coverage on an insurance policy if you don't plan on driving for a long period of time. However, you will only suspend a portion of your policy: the liability insurance. You will still hold onto your comprehensive coverage to protect your vehicle.

You can consider a pause on your coverage if:

• You’re going on an extended vacation, and your car will be parked at home for weeks or months on end.
• You’ll be serving in the military and may need to temporarily relocate abroad.
• Your vehicle needs repairs and isn’t currently drivable.

PROS AND CONS OF PAUSING AUTO INSURANCE

Pros
• You won’t pay for insurance or you pay fewer premiums while your car is out of use.
• You won’t have a lapse if you pause and keep basic coverage, something that could increase your future rates.

Cons
• No protection against non-driving incidents such as theft, vandalism, or fire.
• Fees may apply.
• Your premiums could increase.
• Pausing coverage will leave you uninsured while you’re looking for work.
•Drivers with car loans are typically ineligible.
•You give up important protection like third-party liability, accident benefits, DCPD, and uninsured motorists.
• If you have a car loan, you will likely not have the option to pause their policy.

SHOULD I CANCEL MY AUTO INSURANCE?

The obvious way to get a break from paying auto insurance if you’re not using your car is to cancel the insurance outright and then purchase it again later. While some drivers might want to pause their policy temporarily, others find that completely canceling works better for them.

However, this only works if you’re getting rid of the car. Your registered vehicle is typically legally required to carry insurance even if you’re not driving it, and you’ll be dinged with higher insurance rates later for having a lapse in coverage. So, canceling isn't ideal. And please, note that canceling your policy might seem like the best choice, especially for non-use vehicles, but you could be susceptible to out-of-pocket expenses if your car is vandalized.

Be sure to fully understand the process before canceling so that there aren’t any problems when you purchase insurance in the future.

HOW DO I CANCEL MY AUTO INSURANCE POLICY?

Canceling your insurance is a simple process. You call your insurance company or send written notification of your intent to cancel your insurance on a certain date. But remember, canceling isn't an option if you are leasing or still paying off your car.

CONS OF CANCELING AUTO INSURANCE

•If you cancel your car insurance and later decide to get coverage, your premiums will increase for the lapse in coverage during the time you were uninsured.
• You lose coverage for events that can happen at home like theft, fire, or storm damage even if you park the car in your garage.
• States require some type of insurance coverage for vehicles.

BOTTOM LINE

If you still use the car at all or you expect to go back to driving in the near future, you’ll want to keep it insured to stay legally and financially protected. It is better to reduce extra coverage like roadside assistance.

Most providers are sympathetic to financial concerns due to the coronavirus pandemic and may be able to offer you payment plans that allow you to keep your coverage in place. So, instead of pausing, you could lower your limits or shop around and speak with one of our experts to help you save while still being insured.

Unless you are ready to take your car off the road entirely, your best option to save money is to reduce the coverage.