Freeze Auto Insurance: Yes Or No?

Freezing or pausing your auto insurance is not possible in most states, as insurance is required by law. However, you may be able to temporarily reduce your coverage or suspend your liability coverage if you're not planning on driving for a while. This option is typically only available if you're putting your car in long-term storage or not driving it for an extended period. Some insurers may also allow you to suspend your liability coverage if you're travelling abroad, have a suspended driver's license, or are dealing with an illness or injury that prevents you from driving. It's important to note that reducing your coverage may result in higher out-of-pocket costs if you need to file a claim. Additionally, you may need to file an affidavit of non-use with your local Department of Motor Vehicles (DMV) when pausing or reducing your coverage.

Cancelling your auto insurance policy

Reasons for Cancellation:

• Switching Insurance Providers: If you find a cheaper policy or one that better suits your needs, you may decide to switch. It's recommended to set up the new policy before cancelling the old one to avoid a lapse in coverage, which could result in fines and higher future rates.
• No Longer Owning a Car: If you sell your car or no longer plan to drive, cancelling your auto insurance policy makes sense. Ensure that the cancellation takes effect from the day you no longer own the car.
• Moving to a Different State: Different states have varying insurance requirements. If you're moving, review the regulations of your new state and make any necessary adjustments to your policy.
• Financial Considerations: If you're facing financial difficulties, reducing your coverage or switching to a more affordable policy can help ease the burden.

Steps to Cancel Your Policy:

• Contact Your Insurance Provider: Get in touch with your insurance company to understand their specific cancellation process and any associated fees. Most companies allow cancellation by calling their customer support or agent.
• Understand the Cancellation Process: Ask about any cancellation fees, letters, or notice periods required. Some companies may charge a flat fee or a percentage of the remaining premium as a cancellation fee.
• Sign and Send the Cancellation Letter: If required by your insurance provider, prepare and submit a signed cancellation letter. Include your full name, policy number, and the effective date you want your coverage to end.
• Confirm the Cancellation: Ensure you receive a notice or confirmation of your policy cancellation. This step ensures that the cancellation is official and that you're no longer responsible for the coverage.

Important Considerations:

• Refunds and Prorated Premiums: If you've prepaid your premiums, your insurance company should refund the remaining balance, minus any cancellation fees. However, if you pay monthly, you may only be refunded for the remaining days of the month in which you cancel.
• Lapse in Coverage: Avoid simply letting your policy lapse without notifying your insurer. Doing so may result in continued billing and potential damage to your credit score. Always proactively communicate your intention to cancel.
• State Requirements: Almost every state requires some form of liability coverage for drivers. When cancelling your policy, ensure you understand the minimum insurance requirements in your state to stay compliant.
• New Policy Setup: If you're switching insurance providers, ensure there is an overlap between the end date of your old policy and the start date of the new one. Even a one-day gap can leave you uninsured, which could result in legal consequences and out-of-pocket expenses in the event of an accident.
• Car Loan or Lease: If you have an outstanding car loan or lease, inform your lender about any changes in your insurance coverage. They may have specific requirements or expectations regarding the level of insurance maintained on the vehicle.

Remember, while you have the right to cancel your auto insurance policy at any time, it's essential to follow the proper steps and consider the potential implications to make a well-informed decision.

Reducing your coverage

To start, you can reduce your auto insurance to the minimum car insurance requirements. Almost every state requires liability insurance, and others mandate uninsured/underinsured motorist coverage, personal injury protection and/or medical payments coverage.

Consider keeping comprehensive insurance (or adding it) if you are storing the vehicle while you don’t drive it, in case it suffers damage while stored. Comprehensive pays to replace your car if it’s stolen, and it covers non-driving problems such as vandalism and damage from falling objects.

Ordinarily, you must buy comprehensive along with collision coverage, but your insurer may make an exception and let you keep a comprehensive-only policy, sometimes known as “car storage insurance”, if you’re storing your car long-term. If you have a car loan, your lender may require you to keep both comprehensive and collision coverage.

If your insurer allows you to keep comprehensive and drop everything else, including liability insurance, contact your DMV. You may need to file an affidavit of non-use because your car would no longer have enough insurance for anyone to drive it legally.

You can also reduce your coverage by lowering your policy limits or dropping unnecessary types of coverage. For example, if you own an old car that isn’t worth very much, you might consider dropping collision and comprehensive coverage.

If you do decide to reduce your coverage, make sure that you are still complying with your state’s insurance laws, as well as any coverage requirements from your lender or lessor.

Removing yourself from the policy

Removing yourself from an auto insurance policy is an option if you're going away for a while but others in your household will be driving the car. This option can save you money if you're a riskier driver than the others on your policy, as taking yourself off reduces the odds of a crash. However, if it won't save you money, there's little benefit to removing yourself, and it's probably more convenient to stay on the policy.

If you're not going away and continue to live with other drivers insured on the policy, this may not be an option. Many companies require all drivers listed at the same address to be included on a policy, or else be specifically "excluded".

To remove yourself from the policy, the primary named insured will need to contact the insurance company. They may also need to provide proof that you no longer live with them and no longer have access to the vehicle. This could include a utility bill in your name from your new address, a copy of your lease or mortgage, or a signed removal request letter.

It's important to note that if you're removed from the policy, you may not be able to drive the vehicles covered under that policy. Additionally, removing yourself from the policy could result in a loss of continuous coverage, especially if you don't have another policy in place.

Pros and cons of suspending liability coverage

While you can't pause or freeze your car insurance, you can suspend your liability coverage if you're putting your car in storage. However, this option is not available to everyone and has its own pros and cons.

Pros of Suspending Liability Coverage:

• You won't have to pay for coverage you're not using.
• Your vehicle will still be protected from damage.
• You can avoid a lapse in coverage, which can lead to higher rates in the future.

Cons of Suspending Liability Coverage:

• Drivers with auto loans or leased vehicles are usually not eligible for suspended coverage.
• Insurance suspension is not offered by many auto insurers.
• You'd probably be breaking the law by driving without liability insurance.
• You assume the cost of all liabilities if you decide to operate your vehicle without liability coverage.

Alternatives to suspending your car insurance

While you may be able to suspend your car insurance in certain circumstances, there are several alternatives to doing so. Here are some options to consider:

Reduce your coverage

If you're not planning on driving for a while, you can reduce your coverage to save money on premiums. This could include dropping full coverage or lowering your liability limits. However, reducing your coverage will increase your financial risk, so carefully consider your options before making any changes.

Switch to usage-based insurance

Usage-based insurance policies charge you based on how much you drive. So, if you're not driving much or at all, your bills can go down significantly. However, usage-based policies may not always be cheaper, especially if you drive a lot.

Remove yourself from the policy

If you're on a shared policy, you can ask the primary named insured to remove you from the coverage. This may lower their rates, but it also means you won't be able to drive the vehicles covered under that policy.

Take advantage of discounts

Most insurance companies offer a wide range of discounts, such as for students or certain professions. You can also get discounts for going paperless, paying your annual premium in full, having a clean driving record, or taking a defensive driving course. Check with your insurer to see what discounts you may be eligible for.

Shop around for cheaper insurance

If your policy is up for renewal or you're looking for better rates, you can shop around for cheaper car insurance. Comparing quotes online or through an independent broker can help you find the same coverage you currently have at a lower rate.

Frequently asked questions