The outbreak of COVID-19 has confined almost everyone to their homes. With work from home, ordering groceries, and food online becoming the new normal, car owners face a difficult set of questions. Do they even need car insurance? What is the point of paying premiums for something you are not using? Is it sensible to pay for car insurance for your unused cars in the garage?
The short answer to these questions is an emphatic Yes! You may get some short-term savings by not paying a monthly insurance premium for your car. Still, there are drawbacks to canceling a policy. If your car is in a condition to be driven, then at some time, you will drive it, and when you do so, there is always that chance that something could happen.
You can cancel your car insurance now, but what if you end up needing it again? In that case, you will be labeled as high-risk and, in the future, you might have a hard time getting car insurance or end up paying more. So, it’s cheaper and safer to maintain insurance. Though one of the best options to get your premium lowered is a usage-based insurance, let’s check some of the other viable solutions.
Disadvantages of Canceling Your Policy
Your car won’t be protected – With no insurance, you will be responsible for anything that happens to your vehicle. If a tree were to fall on the garage or some other mishap were to take place, you’d likely have to pay out of your pocket to repair the car.
Canceling Your Policy Might Violate Certain Requirements
Some insurance lenders might not allow you to cancel your policy. In some cases, if you have a monthly car payment, you will have to hold insurance as a condition of your loan.
Cancellation Will Affect Your Future Premiums
If you cancel your coverage, it will create a gap in your insurance history. That will put you in a high-risk category with your insurer. This could increase your premium if you reinstate your policy at a later date.
Rather than canceling your car insurance, you can consider the following suggestions:
Freezing Your Insurance
If your insurer allows you to suspend your coverage, it is better than canceling your policy. Since suspending your premium is not considered a lapse in payment, you will not have to worry about the reinstatement charges. On the contrary, it will help you reduce the insurance costs. Once the coverage is suspended, you won’t be covered for theft or vandalism. So if you’re planning to save the car insurance costs by freezing the policy, remember that you are putting your own financial stability at risk.
Lowering Your Coverage
Some of the car insurance companies will allow you to cut back to the comprehensive-only coverage. However, your insurer may require you to store the vehicle in an approved, secured facility, not in your garage or driveway. You may also need to file documents with the state motor vehicle department certifying that the car is not in use. Your insurance policies may cover things like rental cars, roadside assistance, or providing a loaner car. Eliminating these extras can save money.
Our Point of View
An easy way out would be to cancel your insurance altogether when you are not driving your car. But it is not very simple. Car insurance can offer great peace of mind for the owners.
In the event of a theft or damage, the owner necessarily need not bear the entire financial burden. Therefore, instead of cutting out your insurance completely, it is best advised to opt for cutting the extra and not important coverages.
To do this, consult your car insurance partner and tailor the policy that meets your requirements and current situation. They can help you find a way to lower your insurance premiums while still protecting your car.
Sara Sam may not look like your typical car and finance expert, but don’t let that fool you. With over four years of experience in the industry, she knows all the ins and outs of cars, car insurance, and refinancing. You can trust Sara to help you navigate the often-confusing world of automobiles and financing.
