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 your premiums as your car is still parked 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 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.
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 own 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 your lender might require you to hold insurance as a condition of your loan.
- Cancelation 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, in turn, might 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. You can rest assured that suspending your premium is not considered as a lapse in payment. This will help you reduce your cost. Once your coverage is suspended though, you won’t be covered if your car is stolen or vandalized. If you’re trying to save money on car insurance, do you want to risk having to buy a new car out of your own pocket if the old one is stolen?
- Lowering your coverage – Certain insurers will allow you to cut back to comprehensive-only coverage. But 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.
- Remove the extras – Your insurance policies may cover things like rental cars, roadside assistance, or providing a loaner car. Eliminating these extras can save money.
- Prefer usage-based insurance – Usage-based insurance offers lower premiums to people who don’t drive very much.
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 offers complete peace of mind. One does not have to worry about a sudden financial crunch which may occur if the car is stolen or damaged. Rather than cutting out your insurance completely, opt for eliminating the extra costs of your coverage. Get in touch with your insurance agents to tailor the insurance policy as per your requirements to the current situation. They can help you find a way to lower your insurance premiums and still protect your car.
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