You might have already asked yourself at least once: does my car need insurance if I’m not driving it? Well, we have the answer!
Let’s say you’re not going to be driving your car for a while. Maybe you’re working from home now, or your car is staying in for the winter. In this situation, a common question arises: does my car need insurance if I’m not driving it?
Well, it will depend on a few factors, including your state’s laws, your car’s registration status, and your loan or lease agreement (if applicable). So, let’s delve into all these aspects and explore your options. Also, if you want to check out more financial tips on our website, you can click on this link!
Does My Car Need Insurance If I’m Not Driving It?
While having this possibility might sound perfect, it’s not always an option. Some states have minimum insurance requirements that must be maintained even if the car isn’t driven. Additionally, if you’re financing your car, your lender might require you to carry comprehensive and collision coverage alongside the minimum liability insurance. So, you might ask yourself: what can be done then?
Can You Pause Your Car Insurance If You’re Not Driving?
Even if pausing is allowed, there may be specific requirements, such as needing to pause coverage for a minimum duration, often 60 days or more, and restrictions on how frequently you can suspend your policy, typically no more than once per year. In addition to that, if you’re planning to not use your car on public roads for an extended period, such as 90 days, you might need to file an “affidavit of non-use” with your state’s department of motor vehicles. Also, you might still be required to maintain certain coverages:
- State-Mandated Liability Coverage;
- Comprehensive Coverage.
Pros and Cons of Pausing Your Car Insurance
Pros
- Maintaining Good Standing: opting to suspend your car insurance instead of canceling it can help maintain a positive relationship with insurers. Canceling coverage might label you as a higher-risk driver, potentially leading to increased insurance rates in the future;
- Cost Savings: suspending your policy can save you money if you don’t plan to drive for an extended period.
Cons
- Increased Financial Risk: can leave you financially vulnerable. For example, without comprehensive coverage, if your car is stolen, you would have to cover the replacement costs yourself;
- Reapplying for Coverage: some insurers may require you to apply for a new policy after a suspension, which could affect your premiums based on the insurer’s policies and the duration of the suspension.
When Should I Pause My Car Insurance?
- Seasonal Car: do you own a classic car or a convertible that you only drive during specific seasons? Pausing your insurance during the off-season can be a cost-saving strategy. However, ensure you understand the timeframe and potential reinstatement fees associated with pausing your coverage;
- Long-Term Storage: if your car will be in storage for an extended period (think months or even a year), then exploring reduced coverage options or lay-up insurance could be worthwhile. Remember to factor in the potential risks of theft or vandalism during storage and weigh them against the cost savings;
- Temporary Work-From-Home Situation: perhaps you’re currently working remotely, leading to significantly reduced car usage. While pausing your insurance might seem tempting, consider the possibility of needing to use your car unexpectedly. In such cases, informing your insurance company about the reduced mileage could result in a lower premium without completely canceling your coverage.
What Types of Car Insurance Coverage Are Required?
Most states mandate minimum liability coverage, which protects others in case you cause an accident while driving your car. The required coverage you need depends on your state’s regulations and your lender’s requirements. Here are the most common types you might need:
- Liability Insurance: required in most states, this coverage pays for injuries or property damage you cause to others in an accident;
- Collision Insurance: this covers damage to your vehicle if you collide with another vehicle, an object, or an animal. Lenders typically require collision coverage if you have a car loan;
- Comprehensive Insurance: this protects your car against damage from non-collision events such as theft, fire, or natural disasters. Lenders usually require comprehensive coverage if you are financing your vehicle.
- Uninsured/Underinsured Motorist Insurance: this pays for injuries or property damage if you are hit by a driver who has insufficient or no insurance. Some states mandate this coverage;
- Medical Payments/Personal Injury Protection (PIP): medical payments coverage covers medical expenses for you and your passengers after an accident. In some states, PIP is available instead of medical payments coverage and may also cover lost wages and other accident-related costs. Your state might require you to have either medical payments coverage or PIP.
State-Specific Regulations
Here are some resources to help you find the specific requirements in your area:
- Your State’s Department of Motor Vehicles (DMV) Website: most DMV websites offer information on car insurance requirements, including minimum coverage and non-operational vehicle registration;
- National Association of Insurance Commissioners (NAIC): the NAIC website (https://content.naic.org/) provides an overview of car insurance regulations across different states.