Ways to Pause Your Car Insurance to Save Money
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If you’ve canceled a streaming service for a few months to save a few bucks, then consider how much you can save by pausing your auto insurance for just a month.
The national average cost of car insurance for all drivers is $2,646 per year or $220.50 per month. That monthly savings is about how much you’d save by cutting Netflix for two years.
But before you call your car insurance agent to pause your policy for a month or two, you should first know the requirements to put it on hold and what the potential consequences are if you do drive anyway. Don’t expect to make a short trip to the grocery store.
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What is a pause in auto insurance?
If you don’t plan on using your car for at least a month, then you may want to ask your insurer if your policy can be suspended temporarily.
Other options are to cut back some coverage if you don’t qualify for suspension or remove yourself from a family policy if you’re going to be away and someone else will drive the car.
Some reasons why you may want to pause an auto insurance policy, other than saving money, include:
- Putting your vehicle in long-term storage
- Traveling for a month or more
- Suspended driver’s license
- The car isn’t drivable and will be in the repair shop for a while
- You lost your job and don’t need or can’t afford a car
- You’re recovering from an illness or injury and can’t drive
- Military deployment
Some insurers offer pauses and payment plans if drivers have lost a job or are affected financially by the coronavirus.
We’ll go over the different ways to pause your car insurance, starting with a complete suspension of a policy, and will go over why lesser pauses may be better choices.
Canceling a policy
If you’re not going to use your car for a while, why not just cancel your policy entirely? You can always return to your insurer or find another one quickly enough, right? And maybe at better rates?
Maybe not. While it’s a good idea to shop for lower premiums at renewal time, it’s usually more manageable when you already have coverage. A lapse in car insurance coverage can be seen as violating the law since most states require insurance. It can also lead to higher rates.
A policy can be canceled at any time but should only be done if you no longer have a car or bought a policy somewhere else. Canceling a policy is much more than a pause. It’s ending a policy altogether.
A coverage lapse can lead to higher premiums when you do get car insurance again because continuously insured drivers generally are offered better rates than drivers with coverage gaps.
Still, canceling your auto insurance means you won’t have a bill to pay anymore. And if that’s your main goal, this method gets you there.
But it comes with many drawbacks:
- A coverage lapse that could increase future insurance rates.
- Neither you nor anyone else can drive the car because it won’t be covered by insurance.
- No insurance against non-driving issues such as fire, theft, vandalism, or animal damage.
- If you have a car loan or lease, your lender will require having insurance.
Your state may require you to submit an affidavit of non-use with the DMV to officially take the car off the road and not require auto insurance. If you drive your vehicle after filing this form and canceling your insurance, you’ll be doing so illegally and could be arrested, fined, or both.
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Removing yourself from a policy
Reducing coverage may not be an option if other family members in your household depend on your car. Instead, you can remove yourself from the policy temporarily.
This can be a smart option if you’re being deployed for the military or traveling, for example.
The vehicle will still have insurance so that other family members can drive it legally, and the policy won’t have a coverage lapse. You or other family members must continue paying the car insurance premiums. You can add yourself back to the policy when you return.
Check with your insurer to see how much this option will save you. If you’re 25 or younger and are a riskier driver than others on the policy, you might save some money.
Removing yourself from the policy isn’t a good idea if you’re still living with other drivers insured on the policy. Insurance providers often assume that anyone of legal driving age in a household has access to cars kept on the property and require that they be included on a policy.
Ways to pause car insurance
Suspending coverage
Suspending coverage allows you to pause your policy without canceling it. You also won’t suffer a coverage lapse.
This option means you won’t be able to drive your car at all. You’ll need to file an affidavit of non-use with your state’s DMV so that state-required auto insurance won’t be required. The document tells the state that you won’t operate your car for an extended period.
Some insurance companies don’t allow insurance coverage to be suspended. Or they may allow it under certain circumstances, such as being out of work for a long time due to the coronavirus or other health or unemployment reasons.
You should have other transportation options during an insurance suspension. If you drive your car or any vehicle during this time, you won’t be covered. And no one else in your family can drive your vehicle if the policy is suspended.
If you have a car loan, it’s unlikely that your lender will allow you to cancel an auto insurance policy. Even if you don’t drive and park your car in your garage for a few months, your lender will want you to have theft and vandalism coverage.
Reducing coverage
If you aren’t eligible for a suspended policy because you aren’t canceling your auto insurance policy, your best option may be to reduce some coverage.
You can save money by not having certain types of auto insurance that aren’t needed when you’re not driving your car for a while.
Each state has minimum car insurance requirements, so you may want to start there to get the minimum coverage required by law. Liability insurance is required by almost every state. Without liability coverage, you could face fines and have your driver’s license suspended.
Many states also mandate uninsured/underinsured motorist coverage, personal injury protection, and medical payments coverage. If you get into an accident without these, you could be liable for the other driver's property damage and medical bills.
Having a car loan or leasing a car may require having full insurance coverage.
Keeping comprehensive coverage
If you’re storing your car while not driving, comprehensive coverage pays you if the vehicle is damaged, such as through vandalism, a tree, or something falling on it. It also covers theft and fire.
Comprehensive coverage is usually packaged with collision coverage, and both must be bought together. Your insurer may make an exception and sell you our next option as a comprehensive-only policy.
Storage insurance
Storing your car for at least 30 days and not using it can require comprehensive coverage only, also called storage insurance. It isn’t pausing your current policy but is reducing your coverage so that you’re no longer covered against accidents.
Ways to save during financial hardships
Losing your job due to the coronavirus isn’t enough of a reason for insurance companies to allow you to pause your policy for months and save money on car insurance costs. Still, some will let policyholders delay payments or set up a payment plan if they’re out of work.
Insurers can help by not canceling your policy if you haven’t paid the car insurance premiums. Payments will have to be made up later, but they can be delayed for a few months after losing a job. A payment plan can also be set up while your insurance policy remains in effect when you can’t afford it.
The best way to do this is to alert your insurance company before you start paying the monthly bill late.
Some insurers will allow you to suspend or reduce coverage during a financial hardship, which can lower or eliminate premium payments for a while.
Suspending a policy means you won’t drive the car at all, so you should have alternative transportation options. If you have a car loan or are leasing your vehicle, your lender may not allow your insurance to be suspended.
Reduced coverage is another option if your auto insurance bill is hard to pay while unemployed. However, as we mentioned earlier, you should consider keeping comprehensive coverage because it will cover damage to your car while not driving.
Discounts
Instead of reducing coverage or canceling a policy, you can save money on auto insurance by doing some things that can lead to discounts. Driving safely and not getting into accidents or getting tickets are the best ways to lower insurance rates. Others include:
- Taking a defensive driving course
- Setting a higher deductible
- Finding an insurer offering accident forgiveness for your first accident
- Driving fewer miles
- Being a good student with a B average
- Being a mature driver aged 55 or older
- Bundling auto and home insurance
- Paying the annual premium in full as the policy begins
- Finding loyalty discounts for remaining as a policyholder
- Having safety features such as anti-theft devices
- Enrolling in usage-based insurance that rewards good driving habits
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- Switch Online or Speak to a Licensed Agent
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Costs of pausing insurance
The costs of pausing an auto insurance policy aren’t usually immediate because the main benefit of pausing a policy is saving money. If you decide not to drive your car at all, or store it with limited coverage, then your premium can be dropped entirely or at least reduced significantly.
As we mentioned from the start, the average national cost of car insurance is $2,646 per year. That’s a fair amount of money to save if you don’t need to drive and have other options to get around.
Dropping coverage down to storage insurance only can save you as much as 80% on your premium. This is comprehensive-only coverage that will only cover your stored car from damages in a comprehensive coverage claim for vandalism, theft, fire, and damage caused by animals or weather.
For the average insurance bill, that will leave you paying $500 per year for comprehensive-only coverage.
If you cancel your policy you’ll have a coverage gap when you try to rebuy auto insurance. Insurers consider such drivers a higher risk than those with continual coverage, possibly because drivers with gaps in insurance coverage may not have their policy renewed after causing too many accidents or having a suspended license.
Whatever the cause, a lapse of 30 days or less in coverage can mean an 8% average car insurance rate increase when you do buy insurance again, according to one analysis. For a lapse of more than 30 days, the average premium increases 35%.
Pros and cons of pausing insurance
Pros
- Reducing your car insurance temporarily allows you to keep any insurance discounts you already have.
- Your insurance costs will drop.
- Comprehensive-only coverage allows you to store your car but still have it covered for non-driving damage, such as fire, theft, and vandalism.
Cons
- No one else may be able to drive your vehicle.
- Full coverage will likely be required if you lease or have a car loan.
- Without liability insurance, you could be personally responsible for the costs of an accident you cause while driving.
- You may not be eligible for comprehensive-only coverage if you have a car loan or lease.
The bottom line
Pausing your auto insurance is one way to save money, but you should consider the impact of not using your car for the rest of your life.
If you need your car to get to work, then putting your car insurance on hold for a few months may be more complicated than it’s worth. But if there’s good public transportation near you or you can work from home, then taking a city bus or riding your bike can save you money on auto insurance and other costs of owning a car. Car accidents are hard to get into if you’re not driving.
Not needing a car for an extended period is a big reason to try to pause your auto insurance. Without a lapse in coverage, you’ll keep the discounts you already have, and shouldn’t see your premium increase when it’s time to renew your policy.
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Writer
Aaron Crowe is a freelance journalist who specializes in personal finance writing and editing. He has worked at newspapers, where he won a Pulitzer Prize, and has written for numerous online publications. These include AOL, US News & World Report, WiseBread, Bankrate, AARP, and many websites focusing on housing, credit and insurance. He lives in California with his wife and daughter.
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