Auto Insurance: Can You Hit Pause?

It is possible to pause your car insurance, but it depends on your circumstances and insurer. If you're not going to be driving for a while, you might want to avoid paying for coverage. While you can't exactly pause your car insurance, you do have several options to reduce your costs.

Cancelling your auto insurance policy

First, you can cancel your auto insurance policy at any time and for a variety of reasons. For example, you may no longer own the car, or you may be moving to another state. Whatever your reason, you should get in touch with your insurance company to cancel your policy. You can do this by calling your insurance company, mailing or faxing a signed request for cancellation, or visiting their office in person if they have a physical location. Some companies may also allow you to cancel through their mobile app.

If you are switching insurance providers, it is a good idea to set up your new policy before cancelling your current one to avoid a lapse in coverage. Most states require some type of liability coverage for drivers, and driving without insurance is illegal in many states and can result in fines. If you are keeping your car, you should also be aware that future insurers will see that you had a lapse in coverage, which can raise your rates.

When you cancel your auto insurance policy, your insurer will likely issue a prorated refund of the premium that you paid most recently. However, some insurers also charge a cancellation fee, especially if you want to get out of your policy early. Therefore, it is a good idea to check with your insurer to see if they require any fees, a cancellation letter, or a notice period before they will let you cancel.

If you are cancelling your policy because you are switching insurance providers, you can also have your new insurer deal with the cancellation for you. They will still need your signature, prior policy number, and date of cancellation.

Finally, if you are cancelling your policy because you are moving to a new state, note that different states have different rules regarding the types and amounts of insurance that you are required to carry.

Reducing your coverage

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 insurance covers your car if it's stolen and protects against non-driving problems such as vandalism and damage from falling objects.

You may be able to keep a comprehensive-only policy, sometimes known as "car storage insurance", if you're storing your car long-term. However, if you have a car loan, your lender may require you to keep comprehensive insurance as well as 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.

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

There are two ways to save on car insurance by reducing coverage:

• Lower your policy limits.
• Drop 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.

You can also lower your premium without suspending your insurance by removing some optional coverages. You'll need to keep the legally required auto insurance coverages but you can remove optional add-ons like roadside assistance and custom parts and equipment coverage.

Removing yourself from a shared policy

If you're on a shared policy, you can ask the primary named insured to remove you from the coverage. This may remove your demographics from the averaged auto premium and lessen the costs. However, you may not be able to drive the car once you've been removed from the policy.

If you're going away for a while but others in your household will be driving the car, this option is worth exploring. This is also a good option if you're not going to be driving for a while and want to avoid paying for coverage.

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".

Removing yourself from the policy is not the same as being an excluded driver. If you're simply not listed on the policy, you can still drive the car. Excluded drivers aren't supposed to drive the car, and may be required to prove they have other insurance in order to be excluded.

If you're a riskier driver than the other people on the policy, removing yourself could save you money. However, if you plan to drive again within a few months, consider keeping some level of coverage so you don't have to quote an entirely new policy and get a potentially higher rate.

Cancelling optional add-ons

Optional add-ons cover specific events, like legal costs or personal injury. For example, Motor Legal Protection covers up to £100k in legal costs if you're in an accident that's not your fault. Personal Injury Cover provides up to £100k of cover if you're injured in an accident in your car, even if it's minor.

If you're not planning on driving for a while, you can reduce your limits or drop liability coverage. You can also remove some optional coverages such as roadside assistance and custom parts and equipment coverage.

Cancelling your policy altogether

Cancelling your auto insurance policy is a straightforward process that can be done online or over the phone. However, it's important to note that this will leave a lapse in your insurance history, which may result in higher rates in the future. You will also have to pay cancellation and administration fees, and you may not get a refund, especially if you pay monthly for your insurance.

If you have paid for your policy upfront, you will likely receive a refund for the remaining balance of your annual premiums, minus cancellation and administration fees. However, if you pay monthly, you may not receive a refund and may even have to pay extra to cover the time you've been insured, in addition to the cancellation and administration fees.

It's important to note that add-ons are often non-refundable, and you may still need to pay for them after cancelling your policy. Therefore, it is recommended to contact any add-on providers to cancel those services as well.

Before cancelling your policy, it is advisable to have a new policy in place to ensure you are not left uninsured. Additionally, it is important to review the terms and conditions of your policy to understand the specific cancellation procedure and any associated costs.

Frequently asked questions