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UPDATED: Oct 21, 2019
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There are many reasons you may want to suspend your car insurance policy for a month. Perhaps you’re going on an extended vacation, so you won’t drive your vehicle for three or four weeks.
If you’re called to military duty or sent to another country for a business trip, it may seem like a waste to pay for car insurance while your vehicle is parked.
Alternatively, you may know that you can’t afford to pay your car insurance one month and hope to pause your policy rather than allowing it to lapse for nonpayment.
Read the guide below to determine whether suspending your insurance is in your best interest.
Contact Your Insurance Company
All insurance companies have their own rules regarding policy suspensions, so your first step is to give your insurance broker or the company’s customer service line a call.
Inform them of your current or upcoming situation, and ask them what options are available to you.
Some companies may allow you to cancel or temporarily suspend your policy, but they will likely report that information to your state’s Department of Motor Vehicles.
In South Carolina and many other states, companies now report electronically, so the state will know almost automatically. You may need to turn your license plate in until you have reinstated your policy or secured a new one.
If a suspension is approved, you aren’t covered if the vehicle is stolen or damaged. Even when parked in a safe place, the weather and other unexpected circumstances may cause damage, leaving you with repairs to cover out of pocket.
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Consider Your Alternatives
If your insurance company won’t allow you to suspend your policy, there are some other things that you can do to plan ahead. Some of these options come with consequences, so you have to determine what’s best for your situation.
— Drop to Liability Coverage Only
Many insurance companies will allow you to change your coverage options at any time, and basic liability coverage will keep your vehicle in good standing with most state policies while significantly reducing your premium rate.
You pay less, and you don’t have to worry about giving up your vehicle’s tags until you secure insurance again.
— Short-Term Insurance Policies
If your insurance policy is due to renew around the time you want to suspend your coverage, consider taking out a short-term or temporary insurance policy rather than renewing your current policy.
Use online comparison tools to find the lowest price possible, but keep in mind that you may want to keep some protection just in case your vehicle is stolen or damaged while you’re away.
— Let Your Policy Lapse
If you don’t have the money to pay for your insurance, you have the option of allowing the policy to lapse. When your payment isn’t received, the insurance company will suspend or cancel your policy due to nonpayment.
You can take out a new policy when you’re ready to continue coverage, but this leaves your vehicle unprotected in the meantime.
Consider this your absolute last resort because it involves a lot of risk. Your current insurance company may decline to give you a new policy at a later date, or they may increase your rate because they consider you a higher risk.
In some states, you will lose the ability to register your vehicle and may have to turn in your license plate.
For instance, in New York State, you are required to forfeit your vehicle’s license plate and may face license suspension if your insurance lapses.
In Pennsylvania, uninsured drivers can lose their license and vehicle tags, and they are required to pay a fine of at least $300. In both states, you can avoid fines and license suspension by turning in your vehicle’s tags before your policy is suspended or canceled.
What if you’re deployed?
If you’re deployed for the military and no one will drive your vehicle while you’re away, you should inform your insurance company of the situation as soon as possible.
While most auto insurance companies don’t currently have special programs that allow members of the military to suspend their insurance without consequences, the reason you are suspending your policy may make a big difference when you return and wish to reinstate your policy.
Consider turning in your vehicle’s tags before you cancel or suspend your insurance policy.
Here are some questions to ask yourself before deciding the best course of action in this situation:
- Is there any chance that someone else may need to use your vehicle while you’re deployed? If it’s possible, then you should consider keeping at least liability insurance
- Can you add your car to another trustworthy person’s insurance policy? Paying them for the slight increase in their policy may save you money over paying for your own policy
- Would you benefit from selling your vehicle before you leave? If you expect your deployment to last a year or longer, you may find it much easier to sell rather than maintain the vehicle
What’s your best option?
In many cases, it’s worth paying for your current car insurance even if you aren’t using your vehicle for an extended period of time.
This prevents you from giving up your tags and severing your state registration, and you can get in your vehicle and start driving again at any time.
You don’t have to pay reinstatement fees to the state and wait for them to give you new tags once you’re ready to resume driving.
If that doesn’t work for you for some reason, it’s always best to willingly turn in your tags and ensure your vehicle isn’t driven until you can reinstate your insurance.
You don’t have to worry that your state will take your vehicle’s registration or suspend your license, and you won’t waste money paying fines.
If you are looking for a more affordable policy, use an online tool to help you search for the best coverage.