In the midst of a pandemic, it's not the time to pay for things you don't need and this includes car insurance for an idle vehicle.
You might think about how to abandon the automatic policy if you own a car that you never drive and if it makes more sense to cancel the policy or temporarily suspend it.
Putting your auto insurance on hold can be a good way to save money if you have an out of order vehicle. But it's not as easy as stopping your Netflix subscription. Also, your options may be limited depending on why you are taking a break from driving the vehicle or if you have a car loan. If you still use the car, we advise you to keep it insured to remain legal and financially protected.
If financial difficulties occur due to job loss due to coronavirus, insurers and other financial institutions are likely to be lenient.
As for your auto insurance, there are five main options to explore:
Request a delay or payment plan for coronavirus.
Pause your coverage.
Cancel your policy.
Remove yourself from a policy.
Delays or payment plans related to coronavirus
Many automotive and home insurers are willing to partner with customers financially affected by the coronavirus. Depending on the car insurer, payment assistance can take various forms:
Suspension of cancellations due to non-payment of premiums.
Special payment plans, including late payments, for financial difficulties related to coronavirus.
Customized payment options on a case by case basis.
Regardless of who provides the automatic coverage, the best thing to do is to notify the company before the bills are overdue: here is a list of the contact information of the financial institutions you may need.
Suspension of car insurance coverage
pros and cons
You will not pay for insurance while your car is out of service. You probably will not have a coverage interval, something that could increase your future rates. The vehicle will not be covered if someone wants to drive it. The vehicle will not have insurance against driving does not drive problems such as fires, animal damage, vandalism or theft Drivers with auto loans are generally not eligible
Suspension of coverage substantially pauses your policy but does not cancel it. This way, you can probably prevent your break from being called an insurance range, which could result in higher rates later on. Confirm in advance with the insurer.
Companies do not always allow customers to terminate coverage or may only allow coverage in certain situations. If you plan to be out of work because of the coronavirus for a period longer than the insurer's available grace period or payment plan terms, the company may suggest this option. However, suspension of coverage will not insure you while looking for work.
Use this option only if alternative means of transport are available. You may need to file an "affidavit of non-use" by your state's automotive department to stop the automatic coverage required by the state. This document officially informs the state that you will not be operating your car for a certain period.
Suspension of the policy is probably not an option if you have an auto loan. Lenders generally ask to keep coverage for problems such as theft and vandalism.
Cancellation of the policy
pros and cons
You will not pay for insurance while your car is out of order. You can cancel auto insurance regardless of your insurer. The vehicle will not be covered if someone wants to drive it. The vehicle will not have insurance against irreversible problems such as fire, animal damage, vandalism or theft. You will have a coverage interval, which could increase your future rates. Drivers with car loans are generally not eligible.
You might consider canceling auto coverage and getting a new policy when you're ready to drive the car again. However, like suspension, cancellation will probably not work if you have an auto loan. Your lender will probably want at least some vehicle insurance.
Contact your DMV if you are thinking of canceling. Similar to a suspension, your state may require you to file an affidavit of non-use to officially take the car off the road and issue the required state insurance.
The biggest disadvantage of canceling is that it creates a mistake in your insurance history. Continuously insured customers generally get better rates than drivers with coverage deficiencies, who are typically labeled "high risk drivers".
pros and cons
You will not pay for unnecessary insurance while your car is out of order. You will not have a coverage interval, something that could increase your future rates. If you maintain full coverage, your car will be covered for irreversible problems such as fires, damages. to animals, vandalism and theft The vehicle may not be usable if someone wants to drive, depending on how much the cover is downsizing You will have to pay for the insurance you keep You will probably have to keep some cover if you have a car loan
Reducing coverage is a good alternative if you are not eligible for suspension and you don't want to cancel your policy.
To get started, you can reduce your auto insurance to the coverage required by your state. Almost all states require third party liability insurance, while others impose uninsured / uninsured motor vehicle coverage, personal injury protection, and / or medical payment coverage.
Consider keeping a full insurance (or adding it) if you are storing the vehicle while you are not driving it, in case it suffers damage during storage. It fully pays to replace your car in the event of theft, and covers incessant problems such as vandalism and damage caused by falling objects.
Usually, you need to purchase full and collective coverage, but the insurer can make an exception and allow you to maintain a unique policy, sometimes known as "car custody insurance", if you he is keeping his car long term. If you have an auto loan, the lender may ask you to maintain full collision coverage.
If your insurer allows you to maintain full coverage and release everything else, including third party liability insurance, contact your DMV. It may be necessary to file an affidavit of non-use because your car would no longer have sufficient insurance for anyone to drive it legally.
By removing yourself from politics
pros and cons
The vehicle will be covered for irreversible problems such as fire, damage to animals, vandalism and theft The vehicle will still have the necessary insurance to drive it legally You will probably not have a coverage interval, something that could increase your future rates You will have to pay for insurance while absent You will have to add the policy again once at home for at least 30 days
Instead of changing the coverage, you may be able to temporarily remove yourself from a family car insurance policy. It is worth exploring this option if you are leaving, but others in your family will drive the car.
This option can save you money if you are a riskier driver than others in your policy because taking off reduces the chance of an accident. However, if it doesn't save you money, there are few benefits to removing you and it's probably cheaper to stick to the policy. If you are not going away and continue to live with other policy-insured drivers, this may not be an option. Many companies require that all drivers listed at the same address either be included in a policy, or be specifically "excluded".
Removing yourself from politics is not equivalent to being an excluded driver. If you are simply not listed in the policy, you can still drive the car. Excluded drivers do not have to drive the car and may be required to prove that they have another insurance to be excluded.
There is no single insurance option that works best for everyone. If you decide to keep coverage, a solid payment history should help you get competitive rates along the way.
Lacie Glover is a NerdWallet writer. Email: email@example.com.
The article How to cut the costs of auto insurance during the coronavirus pandemic originally appeared on NerdWallet.
The views and opinions expressed in this document are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.