There can be many reasons why your car is not in a running position. Maybe you got it totaled in an accident and didn’t have the budget to pay for the high deductible. Or maybe, you bought a new collectible antique car that doesn’t run or won’t hit the roads ever. Whatever your situation may be, you might reason that my car doesn’t run, why would I pay for car insurance. So, is it true? Do you still need insurance for a car that doesn’t run?
Let’s understand in detail.
Do You Still Need Insurance For A Car That Doesn’t Run?
And the answer is yes! The laws of all states except New Hampshire and Virginia require you to have a minimum amount of coverage even if your vehicle doesn’t run. In simple words, if you cancel your car insurance, you get your registration canceled as well. And even if not mandatory by law, there are many reasons why canceling your insurance can be a total waste of time, money, and energy. We understand it can be frustrating to pay insurance premiums for a car that doesn’t even run. But so are the laws.
So, once your car breaks down, there are a few courses of action you can follow.
- The first option is to continue paying the premiums as you have always been. And if not,
- Cancel your vehicle registration and also surrender your license plates
- Or you can suspend your insurance temporarily
- Or, lastly, reduce your auto insurance coverage.
To decide which option as mentioned above suits you, let us see each in detail.
However, we will not discuss the first option as it is simple. You will pay the same amount you have been paying until now. You will have the same financial obligations you already know about.
So, let’s start with the second one.
#1: Cancel Your Insurance And Cancel Your Registration Along With It!
As we already know, if you cancel your insurance, you also need to cancel your car registration.
In some cases, where people have a spare car to drive when one is totaled, they cancel the insurance on the totaled vehicle. However, they might think they are doing the right thing, but there is one rule you should take care of when you cancel the insurance.
“Cancel your registration before you cancel your car insurance.”
Not following this rule can have grave consequences, like,
- Heavy Fines
- Criminal Charges
- Jail Time
- A Suspended Driver’s License
Why? Because your local Department Of Motor Vehicles (DMV) would assume that you will attempt to drive the car while uninsured and thus break the rules.
Therefore, always cancel your registration before you withdraw your insurance. If any of the above four conditions happens, you might find it challenging to re-register the vehicle and find good auto insurance.
And even if you follow all the rules, your premium rate might still go up when you want to re-register as there is a gap in your insurance now.
If you go for this option, you must be sure you will not use the vehicle again for at least as long as you can foresee. Or there is no reason to waste your time, energy, and money.
#2: Suspend Your Car Insurance Temporarily
This is likely the option you would go for if you plan to use your car once it is repaired or out of storage.
It gives you the best of both worlds. You can make some savings, and your insurance will still not be canceled. Thus, your premium rates will not go up as well.
Though, not all insurance companies provide this facility. You would need to ask your insurance provider about this and if they do offer it, enquire about the process as well.
But since you are putting a pause on your insurance policy, however, temporary, there would be repercussions. Like,
- According to the law, nobody can drive that vehicle for whatever reason possible. So, if you need it in an emergency, you won’t be able to drive it.
- The car is no longer protected from natural disasters, animals, theft, vandalism, etc.
- If you have your car on finance or lease, you mostly cannot use this option because your owner would want its investment to stay safe.
If you find these negatives too much to bear, here is our best option- the reduced car coverage.
#3: Reduce Your Car Insurance Coverage
This is the best and safest option according to us. If you have broken your car and are waiting to get it repaired and would not be driving it for a while, go for this option.
Your insurance coverage comprises mainly three types of coverages- Liability, Collision, and Comprehensive. Reducing your coverage helps you drop the unnecessary ones like collision and liability and keep the necessary ones like the comprehensive coverage.
You will not be hitting the road, and thus you possibly cannot get involved in a collision accident. Therefore, paying for collision and liability coverages does not make much sense, and you can drop them.
But even while in the garage or parked outside your house, it can get damaged by hail, falling trees, floods, etc., and thus you may need comprehensive coverage to protect it.
In A Nutshell…
We think the way forward depends on your situation. But if you plan to use your car once it is back in order, reducing your car coverage can be a good option. While canceling the policy and registration of your vehicle is wise only if you will not use the car for the foreseeable future.
So, this was all about do you still need insurance for a car that doesn’t run. We hope you found the content helpful. And if you have any doubts, questions, or suggestions, please drop them in the comments box. We are all ears and reply ASAP!