License Storage And Auto Insurance: What's The Connection?

If you're storing your car, you might be wondering if you need to keep it insured. While insurance companies don't offer specific policies for cars in storage, it's still important to keep your car insured to maintain continuous coverage and avoid being labelled a high-risk driver. This is often referred to as car storage insurance or parked-car insurance, and it typically involves reducing your coverage to comprehensive-only insurance, which covers your car in most non-moving, non-driving instances. This type of insurance is particularly useful if you're going on an extended trip or storing your car for the winter and won't be using it for a long period of time.

Comprehensive-only insurance covers theft, hail, fire, etc

When you're not using your car for a long period of time, you might consider cancelling your auto insurance policy. However, it's recommended that you keep your policy active by purchasing car storage insurance, also known as parked-car insurance or comprehensive-only coverage. This type of insurance covers anything that can happen to your vehicle while it's stored or parked, including theft, hail, fire, vandalism, and other mishaps.

Comprehensive-only coverage is ideal for cars in long-term storage because it covers damage from a range of issues, such as natural disasters, rodent damage, and falling objects. If your car is leased or financed, your lender will likely require you to maintain a full-coverage policy, which includes comprehensive coverage. This type of insurance is optional if you own your vehicle outright.

Comprehensive coverage is a great way to protect your vehicle from unexpected events and ensure you're covered no matter what comes your way. It's important to note that comprehensive coverage does not include collisions with other vehicles or objects. If you need to drive your car, even for a short distance, you will need to reinstate liability coverage as comprehensive coverage does not cover accidents while driving.

By choosing comprehensive-only coverage, you can reduce your auto insurance costs because you're only paying for one type of coverage. Additionally, you'll be able to prevent a lapse in coverage, which can lead to higher rates in the future. Comprehensive coverage is determined by factors such as the make and model of the vehicle, the driver's record, insurance history, and location-specific requirements.

Dropping coverage makes repairs difficult

Dropping auto insurance coverage can make it more difficult to repair your vehicle in the event of damage. While it may be tempting to cancel your policy to save money when your car is in storage or not being used, maintaining at least comprehensive coverage is advisable to protect against unforeseen events.

Comprehensive coverage is the only type of auto insurance you need if your vehicle is not in use for an extended period. It covers any event that can damage your car while it's stationary, such as theft, vandalism, building collapse, and fire. For example, if you have comprehensive coverage and your parked car is damaged in a storm or destroyed in a garage fire, you will only have to pay the deductible amount.

Dropping coverage altogether can lead to higher premiums in the future due to coverage gaps in your auto insurance history, which can cause insurance companies to regard you as a high-risk driver. Additionally, without insurance, you will be fully responsible for any repairs needed for your vehicle, which can be costly.

If you decide to maintain comprehensive coverage for your stored vehicle, you can reduce your premiums by taking precautions to avoid potential damage. These include keeping your car covered, washing it regularly, changing the oil, filling the gas tank, keeping the battery charged or disconnected, avoiding the use of the parking brake, and fully inflating your tires.

In summary, while dropping auto insurance coverage can lower your premiums, it is important to consider the potential consequences, such as higher future premiums and the financial burden of repairs. Maintaining comprehensive coverage for a stored vehicle can provide peace of mind and protect against unforeseen events.

Gaps in insurance coverage lead to higher rates

Gaps in insurance coverage can lead to higher rates for several reasons. Firstly, if you cancel your car insurance policy, you create a coverage gap in your auto insurance history, causing your insurance company to view you as a high-risk driver. Consequently, you may face higher premiums when you reinstate your policy in the future.

Secondly, during the period of a coverage gap, you are left without protection against accidents and other types of damage. For instance, if a tree falls on your garage, you will have to pay the full cost of repairing your car out of your own pocket.

Thirdly, certain circumstances may require you to maintain continuous coverage. If you are financing your vehicle, your loan agreement may mandate that you keep your car insured as a condition of the loan. Similarly, if you live in a state with liability insurance requirements, you must maintain coverage to drive legally.

Finally, gaps in insurance coverage can lead to higher rates when you seek to insure a different vehicle or purchase a different type of insurance. Insurance companies view continuous coverage as a positive indicator of low risk, and they may offer lower rates as a result.

To avoid gaps in insurance coverage, it is recommended to keep your policy active, even when your car is in storage. You can reduce your coverage to comprehensive-only insurance, which is typically much cheaper than a standard policy and will protect your vehicle while it is not in use.

Lenders require full-coverage insurance for leased vehicles

Lenders typically require full-coverage insurance for leased vehicles. This means that if you're leasing a car, you'll need to carry comprehensive and collision coverage in addition to liability insurance and any other legally required coverages. Full-coverage insurance protects the lender's investment in the vehicle and ensures that it can be repaired or replaced if it's damaged or totaled.

Comprehensive coverage will protect your leased vehicle in most non-moving, non-driving instances. For example, it will cover damage from natural disasters like flooding, fire, and weather events, as well as damage caused by falling objects or rodent activity while the car is in storage. Collision coverage, on the other hand, will cover damage to your vehicle if you're in an accident, regardless of who is at fault.

In addition to comprehensive and collision coverage, lenders may also require other types of insurance such as uninsured motorist coverage or gap insurance. Uninsured motorist coverage will protect you if you're in an accident with a driver who doesn't have insurance, while gap insurance will cover the difference between the amount you owe on your lease and the actual cash value of the vehicle if it's totaled.

It's important to note that the requirements for leased vehicles may vary depending on the lender and your location. However, maintaining full-coverage insurance is generally necessary to comply with the terms of your lease agreement and protect yourself financially in case of any damage or accidents involving your leased vehicle.

Minimum coverage requirements vary by state

The type of auto insurance you need depends on the state you live in. Each state has its own minimum coverage requirements, which typically include liability insurance and may include other types of coverage such as personal injury protection (PIP) or uninsured motorist coverage.

Liability insurance is required in all states except Virginia. It helps pay for any damage you cause to another driver, their passengers, or their property in a car accident. There are three components to liability coverage: bodily injury coverage per person, bodily injury coverage per accident, and property damage coverage per accident. For example, if you collide with a van carrying several passengers and your liability coverage limit is 15/30/10, your insurance will pay up to $15,000 per person for bodily injuries to people in the van, with a total limit of $30,000 in bodily injury costs, and up to $10,000 in property damage.

Uninsured/underinsured motorist coverage (UM/UIM) is required in about half of the states. This coverage helps pay for injuries to you and your passengers, as well as damage to your car and other property, if you're hit by a driver with little or no insurance.

Personal injury protection (PIP) is required in about 20% of states, which are mostly "no-fault" states where each party is responsible for their own damages in an accident. PIP covers medical expenses for the insured and their passengers, regardless of fault, and may also cover lost wages or other benefits not covered by health insurance.

Medical payments coverage is required in only a few states, including Maine, New Hampshire, and Pennsylvania. It is similar to PIP but does not cover additional benefits such as lost wages.

In addition to the above, some states may also require other types of coverage, such as bodily injury liability, property damage liability, or uninsured motorist property damage coverage.

It's important to note that minimum coverage requirements are just the bare minimum to legally drive in a state. Most insurance professionals recommend purchasing more than the minimum amount of coverage to provide greater financial protection in the event of a serious accident.

Frequently asked questions