Suspended Car Insurance: What is it and Should I Do it?

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No one tells you that when you first buy car insurance, you have to keep buying it — even if you stop driving for a while. Most states require liability insurance for any car that’s registered. More importantly, if you cancel your car insurance, it’s considered a lapse of coverage, and this means you’ll pay higher rates when you get insured again. So what are your options? Will an insurer allow you to suspend car insurance temporarily?

Depending on your situation, you could switch to a cheaper policy, drop part of your coverage, get added to someone else’s policy, or buy non-owner’s car insurance. We’ll look at four scenarios to find out when to suspend your car insurance and when to hang onto your policy.

Scenario 1: You’re Being Deployed Overseas

The typical Army deployment is 12 months, although the actual length may vary (and is usually different for other branches of the military). Paying for a full year of car insurance when you’re not even using your car is a huge financial drain — so can you suspend your car insurance during a deployment? If no one else, such as a spouse or other family member, will be using your car, it’s probably worth a try.

Step one is calling your insurance company to ask if they offer policy suspension for deployed service members. If so, find out what you’ll have to do to make it happen. Typically, you’ll have to keep comprehensive coverage (in case something happens to your car while it’s being stored). Step two is making sure you meet the requirements for car insurance suspension, such as storing your vehicle in a secure facility. You may also have to file an “affidavit of non-use” with the state, which allows you to keep your vehicle registration without liability coverage. Here’s an example for California.

Scenario 2: You’re Traveling Overseas for an Extended Period

Whether you’re traveling abroad for work or for fun, suspending your car insurance looks like an attractive option if you’ll be overseas for several months. The money you save on insurance could pay for your hostel stay in Berlin or a fabulous weekend in Buenos Aires… But can you actually do it?

You’ll have to call your insurance company to find out. They can tell you if it’s possible to suspend your insurance. Just as for a military deployment, you’ll probably have to obtain proof that your vehicle’s being stored, and you may have to cancel your car registration.

Another alternative to suspending your auto insurance, if you won’t be using your car much or at all, is to switch to pay-per-mile insurance. Available in certain states, this type of insurance is for people who drive less than 10,000 miles a year. You pay a base premium, plus a per-mile rate (tracked by a telematics device in your car). So if your car is parked all month, you only pay the base rate.

Scenario 3: You’re Getting Rid of Your Car

Your company is giving you a six-month assignment in New York City. You don’t want to bring your car, so you decide to sell it. Should you cancel your car insurance? Or can you suspend it?

In a situation like this one, when you don’t currently have a car but you plan to drive again in the future, you’ll probably want to choose a third option: keeping your insurance but reducing your coverage to save money. That way, you can still drive legally, if you borrow someone’s car or sign up for a car-sharing service.

Call your insurance company and ask about non-owner’s car insurance, which is liability coverage for people who don’t own cars. Or, you can keep your current plan and drop any collision/comprehensive coverage you had on the vehicle. If that’s still more than you want to pay each month, consider lowering your liability to the minimum coverage required by the state where you’ll be living.

Scenario 4: Your License is Suspended

If your license gets suspended, don’t try to suspend your insurance too! Hang onto your current insurance until the term ends, even if you’re not driving. That’s because when your policy renews, your insurance company may decide to drop you if your license is still suspended — or, at the very least, raise your premiums.

If you do get dropped, one option is to have a family member add you to their policy. If you have to find your own cheap car insurance when you have a license suspension on your record, it’s smart to shop around. Compare personalized quotes with us to find out which insurance company will offer you the best deal.

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