How to Reduce, Pause or Cancel Your Car Insurance

You can temporarily suspend, cancel, or reduce your coverage, or you can remove yourself from a policy.

Now is not the time to pay for things you don't need, including car insurance for a parked vehicle. You may be wondering how to get rid of your auto policy if you own a car that you never drive — and whether it is better to cancel the policy or suspend it temporarily.

If you have an out-of-service vehicle, putting your car insurance on hold can be a good way to save money. However, it is not as simple as canceling your Netflix subscription. Furthermore, depending on why you're not driving the vehicle or whether you have a car loan, your options may be limited. If you continue to use the car, you must keep it insured in order to remain legally and financially protected.

If you are experiencing financial hardship as a result of job loss caused by the coronavirus, insurers and other financial institutions are likely to be understanding.

When it comes to auto insurance, you have five main options to consider:

  • Request a payment delay or plan due to the coronavirus.
  • Reduce your insurance coverage.
  • Suspend your insurance coverage.
  • Remove yourself from a policy.
  • Cancel your insurance policy.

Coronavirus-related payment delays or plans

Many auto and home insurance companies are willing to work with customers who have been financially impacted by the coronavirus. Payment assistance can take many forms, depending on your auto insurer and state regulations:

  • Cancellations are being held up due to nonpayment of premiums.
  • Special payment plans, including delayed payments, are available for those experiencing financial hardship as a result of the coronavirus.
  • Custom payment options on a case-by-case basis.
  • Auto insurance refunds are available, with the majority of insurers offering a rebate for April and May 2020. (at minimum).

Keep in mind that not all relief options have been extended beyond May. For the most recent information, contact your insurer.

Whatever company provides your auto insurance, the best thing to do is notify the company before your bills are past due — here is a list of financial institutions whose contact information you may require.

Reducing your coverage

Pros

Cons


  • You won’t pay for unneeded insurance while your car is out of use.
  • You won't have a coverage lapse, something that could increase your future rates.
  • If you keep comprehensive insurance, your car will be covered for non driving problems like fire, animal damage, vandalism and theft.

  • The vehicle might not be usable if anyone wants to drive, depending on how much you scale back coverage.
  • You'll have to pay for the insurance you keep.
  • You'll likely have to keep certain coverages if you have a car loan.

 

If you are not eligible for suspension, reducing your coverage is a good alternative that allows you to avoid cancelling your policy. That way, you can probably avoid having your hiatus labelled as an insurance lapse, which would almost certainly result in higher rates later. Confirm this with your insurer ahead of time.

To begin, you can reduce your car insurance coverage to the minimum required by your state.

Almost all states require liability insurance, and some also require uninsured/underinsured motorist coverage, personal injury protection, and/or medical payments coverage.

If you are storing the vehicle while not driving it, consider keeping comprehensive insurance (or adding it) in case it sustains damage while being stored. Comprehensive insurance pays to replace your car if it is stolen, and it also covers non-driving issues like vandalism and damage from falling objects.

Normally, you must purchase comprehensive coverage in addition to collision coverage, but your insurer may make an exception and allow you to keep a comprehensive-only policy, also known as "car storage insurance," if you are storing your car for an extended period of time. If you have a car loan, your lender may require that you maintain comprehensive and collision coverage.

Contact your DMV if your insurer allows you to keep comprehensive while dropping everything else, including liability insurance. You may be required to file an affidavit of non-use because your car no longer has enough insurance for anyone to legally drive it.

What happens if you suspend your car insurance?

Pros

Cons


  • You won’t pay for insurance while your car is out of use.
  • You likely won't have a coverage lapse, something that could increase your future rates.

  • The vehicle won't be covered if anyone wants to drive it.
  • The vehicle won’t have insurance against nondriving problems like fire, animal damage, vandalism or theft.
  • Drivers with car loans are typically ineligible.

 

Suspending coverage essentially pauses but does not cancel your policy, saving you from a coverage lapse.

Companies may not always allow customers to suspend coverage, or may only allow it in certain circumstances. If you expect to be out of work due to the coronavirus for a period of time that exceeds your insurer's available grace period or payment plan terms, the company may suggest this option. Pausing coverage, on the other hand, will leave you uninsured while you look for work.

Use this option only if you don't have another mode of transportation. To stop state-required auto coverage, you may need to file an “affidavit of non-use” with your state's department of motor vehicles. This document notifies the state that you will not be operating your vehicle for a specified period of time.

If you have a car loan, you probably won't be able to suspend your policy. Lenders typically require you to maintain coverage for issues like theft and vandalism.

Removing yourself from the policy

Pros

Cons


  • The vehicle will be covered for nondriving issues like fire, animal damage, vandalism and theft.
  • The vehicle will still have the insurance needed to drive it legally.
  • You likely won't have a coverage lapse, something that could increase your future rates.

  • You'll have to pay for insurance while you're away.
  • You'll have to add yourself back on the policy once you’re home for at least 30 days

 

Instead of changing your coverage, you may be able to temporarily remove yourself from a family car insurance policy. This is an option to consider if you are going away but others in your household will be driving the car.

This option can save you money if you are a riskier driver than the other drivers on your policy because removing yourself reduces the likelihood of a collision. However, if it isn't going to save you money, there's little point in leaving, and it's probably more convenient to stay on the policy. This may not be an option if you are not leaving and continue to live with other drivers covered by the policy. Many companies require all drivers listed at the same address to be included on a policy, unless they are expressly "excluded."

Removing yourself from the policy does not imply that you are an excluded driver. You can still drive the car if you are not listed on the policy. Excluded drivers are not permitted to drive the vehicle and may be required to show proof of other insurance in order to be excluded.

How do I cancel my insurance policy?

Pros

Cons


  • You won’t pay for insurance while your car is out of use.
  • You can cancel your car insurance regardless of your insurer.

  • The vehicle won't be covered if anyone wants to drive it.
  • The vehicle won’t have insurance against nondriving problems like fire, animal damage, vandalism or theft.
  • You'll have a coverage lapse, which could increase your future rates.
  • Drivers with car loans are typically ineligible.

 

When you're ready to drive the car again, you could consider cancelling your auto insurance and getting a new policy. However, if you have a car loan, cancellation, like suspension, is unlikely to work. Your lender will almost certainly require that you have at least some insurance on the vehicle.

If you're thinking about cancelling, contact your DMV. Your state may require you to submit an affidavit of non-use, similar to a suspension, to officially take the car off the road and drop state-required insurance.

The most significant disadvantage of cancelling is that it causes a gap in your insurance history. Customers who are continuously insured typically receive lower rates than drivers who have coverage gaps, who are typically labelled "high-risk drivers."

There is no single insurance plan that is best for everyone. If you decide to keep your insurance, a good payment history should help you get competitive rates in the future.