Can You Pause Car Insurance Temporarily?
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Pausing car insurance seems like a great way to save money. But is pausing car insurance temporarily an option? Can you pause car insurance when you’re not driving?
Typically, you cannot pause car insurance temporarily. Some drivers cancel car insurance when traveling for extended periods of time, while others drop certain coverages. However, simply “pausing” car insurance is rare.
You Cannot Pause a Standard Car Insurance Policy
Most car insurance policies do not allow you to pause car insurance. It doesn’t matter if you are traveling for a week or a year: your car insurance policy is unlikely to have any language explaining a “pause”.
Most car insurance policies do, however, let you cancel your policy. You may even receive a refund. Some policies require you to pay a small cancelation fee if canceling before your expiry date, while others do not.
In some cases, it’s in your best interest to cancel your car insurance entirely. If you’re traveling for two years and won’t have a vehicle, for example, then you may want to cancel your car insurance policy.
In other cases – say, if you’re on vacation for three weeks – it’s not worth canceling your policy.
Reasons to Cancel Car Insurance
You can’t technically “pause” car insurance, but you can cancel coverage. Depending on the unique situation, it may be in your best interest to cancel car insurance:
- You are selling your car and will not have a vehicle for the foreseeable future
- You do not plan to drive anyone else’s vehicle regularly
- You are traveling for an extended period of time and don’t mind leaving your car unprotected
- You cannot afford coverage anymore and do not want to let your insurance lapse
In all of these situations, it may be in your best interest to cancel your car insurance policy, then buy new car insurance when you return. This can save you money and avoid unnecessary expenses.
However, car insurance may be more valuable than you think. In many cases, canceling car insurance is not a good idea. It leaves your car unprotected. It can also leave you without insurance – say, if you are renting a car while traveling.
Reasons Not to Cancel Car Insurance
Canceling car insurance is the smart choice in some situations, but not others. It may seem like a smart idea – but there are certain downsides to canceling car insurance.
Your Lender Requires It
First, people who are financing or leasing a vehicle cannot cancel or pause car insurance. You are not the full owner of the vehicle, and the lender requires insurance as part of the lending agreement. If you remove insurance from a leased or financed vehicle, then that vehicle is not protected. The vehicle is the collateral of the loan, and that collateral needs to be protected.
If you are the full owner of your vehicle, however, and the vehicle is not being leased or financed, then you should be able to remove, pause, or cancel car insurance. However, it may still not be a good idea.
It Leaves Your Vehicle Vulnerable
If you pause or cancel insurance, then your vehicle is not protected at all. You may think: well, I’m not driving, so what’s the worst that could happen? However, your car is still vulnerable to fire damage, water damage, theft, vandalism, and other damages.
Let’s say you park your car in your garage while you’re away. Your garage should protect your vehicle against the elements. However, your garage is not a 100% safe environment. If there’s a house fire, and your car does not have insurance, then you will not receive compensation. You might assume homeowners insurance covers fire damage to your vehicle when it’s parked at home, but that’s not the case: homeowners insurance does not cover vehicles.
For similar reasons, your car is susceptible to theft, vandalism, storm damage, wind damage, hail damage, water damage, and other types of environmental damage.
It Invalidates Your Registration
Canceling car insurance will also invalidate your vehicle registration. In most states, drivers are required to have basic liability insurance on any registered vehicle. When you cancel car insurance, your insurer sends a notice to the DMV stating you no longer have insurance. This means your registration is invalid, and you have to return your license plates.
In certain states, you can cancel car insurance without losing registration. Check with your DMV to make sure.
It Leaves You Without Rental Car Coverage
Canceling car insurance can also leave you without coverage when renting or driving another vehicle. If you rent a vehicle on your trip, for example, then you might not have insurance unless you have coverage through your credit card or your purchase supplemental insurance through the rental agency.
It Can Increase Your Insurance Rates
There’s one final reason to avoid canceling car insurance: to avoid higher insurance premiums. Many insurers give a discount for maintaining continuous car insurance coverage. If you cancel car insurance, then you no longer have a continuous insurance record. If you go without insurance for one or two years, then your insurer may raise your rates as high as they would be for an inexperienced driver when you go to reinstate your coverage.
For all of these reasons, canceling car insurance may seem like a good idea – but it could cause more damage than it’s worth in the long run.
Contact your Insurer for Car Insurance Pause Options
Most insurance companies don’t technically let you “pause” insurance. However, some insurers have other options, letting you reduce car insurance premiums while still being covered.
Pause-like options include:
- College student discounts for students living away from home
- Military discounts for active military members temporarily residing overseas
- Low-mileage discounts
- Reducing or removing liability coverage while maintaining comprehensive coverage
- Classic car coverage and similar policies for vehicles only driven during certain months
- Insurance options for vehicles sitting in storage and not being driven
If you are going on vacation for several months, for example, then your annual mileage is expected to drop. Many insurers offer low mileage discounts.
Final Word on Pausing Your Car Insurance
Most car insurance companies do not allow you to pause your policy. Whether you’re on vacation for a week or a year, you cannot pause your car insurance and resume it when you return.
However, you can cancel car insurance. If you don’t plan to drive for the next few months, or if you are traveling for multiple years, then you may want to cancel your car insurance policy.
Canceling car insurance comes with downsides. It could invalidate vehicle registration, for example. It could lead to higher insurance prices in the long run. And, if you continue to own your vehicle, then your vehicle is at risk of being stolen or damaged, and you won’t receive compensation.
Consider the pros and cons before canceling or pausing your car insurance policy.