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Do You Have to Pay Auto Insurance When You’re Not Driving?

Many Americans who are unemployed or working from home due to COVID-19 are driving less than ever (if at all). If you're one of them, you may wonder if you still need to carry auto insurance.

Even if you're not using your car for an extended period, you still need some level of insurance in most cases. However, the type of coverage you need varies depending on several factors, including where you live, whether your car is paid off and why you're not driving it.

Auto Insurance Discounts for COVID-19

Many auto insurance companies have stepped up to offer their customers discounts on auto insurance in response to the coronavirus pandemic. The discount might come in the form of rebates, credits or a price cut. If your insurer hasn't already notified you about what they're doing to ease the financial burden, contact them to find out what, if any, options are available and what you need to do to qualify.

If you foresee job loss or other coronavirus-related factors making it hard to pay your car insurance, contact your insurance company right away to ask about your options. They may be willing to work with you by setting up a payment plan or allowing you to defer payment temporarily. Don't wait until the last minute to contact your insurer—and definitely don't skip your payment. Missing payments could result in losing your insurance.

Reasons for Not Driving Your Car

Even in normal times, you might go through periods where you're not using your car. It could seem like a waste of money to pay for car insurance if:

  • You're going overseas for an extended period
  • You're in the military and are being deployed
  • You've suffered an injury that will keep you from driving for several months
  • You're repairing or restoring a car that won't be drivable for a while
  • Your child is going off to college and leaving their car at home

But before you cancel, it's important to understand that car insurance protects you against more than just driving accidents. Even when your car spends most of the time in your driveway, certain coverage may be required—or is just a smart idea.

What Car Insurance Coverage Is Required?

There are several different types of auto insurance coverage. Here are the primary ones:

  • Liability coverage covers the cost of bodily injury and property damage caused by your driving.
  • Collision coverage covers damage to vehicles if you're involved in an accident.
  • Comprehensive coverage protects you if your vehicle is stolen or is damaged by natural events, fire or vandalism.
  • Uninsured/underinsured motorist coverage can help pay for damages and medical costs if a driver who's uninsured or underinsured causes an accident you're involved in.
  • Medical payments/personal injury protection coverage: Medical payments coverage helps pay medical costs if someone in your vehicle is injured in an accident. Some states have personal injury protection (PIP) coverage instead. PIP covers not only medical costs, but also other expenses related to injury, such as lost wages.

Most states require you to have a certain minimum level of insurance to protect other drivers. This typically includes liability coverage, but may also include medical payments or PIP coverage. The states that don't require insurance mandate some other proof of financial responsibility.

States aren't the only entities compelling you to have car insurance. If your vehicle is leased or financed, the lender typically will require a certain amount of collision or comprehensive coverage. This ensures that even if the vehicle is damaged, totaled or stolen, they still recoup the balance of the outstanding loan or lease.

Coverage that is mandated by your state or lender isn't optional. Even if you aren't driving the car, you'll still need to maintain the minimum levels of insurance they require, or you'll be breaking the law.

How to Cut Auto Insurance Costs When You're Not Driving

If you won't be driving for a while, you might be considering several options for reducing your auto insurance costs.

  • Canceling your insurance: Canceling your auto insurance altogether is generally not a good idea. In addition to it possibly being against your state laws, it creates a lapse in your insurance history, which could cause insurers to consider you a high-risk driver going forward. This will make it harder to reinstate coverage when you start driving the car again, and any coverage you do get is likely to be more expensive.
  • Suspending your insurance: Some insurers and states may allow you to temporarily suspend your coverage. If this is an option in your situation, it's a better choice than canceling your policy. Suspending your insurance isn't considered a lapse in coverage and can reduce your costs.
    Keep in mind that once your comprehensive coverage is suspended, you won't be covered if your car is stolen, vandalized or crushed by a tree branch. If you're trying to save money on car insurance, do you want to risk having to buy a new car out of pocket if the old one is stolen?
  • Cutting back your coverage: Reducing your coverage can save you money while ensuring you're still protected. Some insurers will let you cut back to comprehensive-only coverage. However, your insurer may require you to store the vehicle in an approved, secured facility, not just leave it in your garage or driveway. You may also need to file documents with your state motor vehicle department certifying that the car is not in use.
    If your car is paid off and isn't worth very much, you can save money by canceling comprehensive and collision insurance altogether. Just know that if your car is stolen or totaled in a fire or disaster, you'll be on the hook for replacing it.

Other Ways to Reduce Car Insurance Costs

There are other, less drastic steps you can take to help lower your auto insurance costs while still maintaining your coverage.

  • Eliminate extras. You might not even realize it, but your car insurance policy may cover things like rental cars, roadside assistance or providing a loaner car if yours is in the shop. Cutting out these little extras can save money.
  • Ask about usage-based insurance. Also called low-mileage or pay-per-mile insurance, usage-based insurance offers lower premiums to people who don't drive very much. For example, if you drive under 10,000 or 12,000 miles annually, you might be eligible for a reduced rate.
  • Check into discounts. You may be eligible for car insurance discounts based on membership in certain organizations, bundling your car and homeowners insurance with the same insurance company, or other factors.
  • Increase your deductible. See how much you can save on premiums by increasing your deductible. Just be sure you're prepared to cover the larger deductible if you need to make a claim.
  • Shop around. If you're not happy with the options your current insurer offers, get quotes from other insurance companies to compare prices.
  • Improve your credit score. It's not a change you can make overnight, but raising your credit score might lower your insurance premiums. Car insurance companies in many states use your credit score as a factor in pricing your insurance; insurers generally offer lower rates to those with higher scores.

The Bottom Line

It would be nice if you could simply cancel your auto insurance while you're not driving your car. In reality, however, it's not that simple. Going without auto insurance can put your physical and financial health at risk, which could end up costing you much more than any savings in premiums.

Fortunately, there are steps you can take to reduce your costs without eliminating coverage. The best place to start is by contacting your insurance company. Insurance agents will be up to date on current insurance requirements and can suggest options tailored to your specific situation. Chances are, they'll find a way you can lower your auto insurance premiums and still protect yourself, your car and everyone else on the road.

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