Alternatives to pausing car insurance
You may want to pause your car insurance if you’re going away for a while or don’t plan on driving your car. Unfortunately, it isn’t always an option. While it may not be possible for everyone to simply pause their car insurance coverage, there are many ways that you can keep your rates low and avoid paying for a service that you’re not using.
Reduce your coverage
Your car insurance premium is the amount you pay for coverage. Think of that as your monthly rent. If you don’t make payments, you won’t have protection. But if you need to lower your rate temporarily, you might lower your coverage instead of pausing your car insurance. Here are two ways to lower your costs.
Drop full coverage. This coverage helps pay to repair or replace your vehicle if it’s damaged in an accident or stolen. But it costs more than liability-only insurance. Dropping it could save you money. But without full-coverage insurance, you’ll have to pay for repairs out of pocket if you get into an accident or your car is stolen.
Lower liability limits. Liability coverage is almost always required by law and covers bodily injury and property damage claims that you cause in an accident. Lowering your amount of coverage should lower your costs. But going too low means that you could pay tens of thousands (or even hundreds of thousands) of dollars out of pocket if someone sues you.
Keep in mind these two options could lower your premiums, but they can also increase your financial risk. Plus, you may not have the option if your car is financed or leased. If you have a loan or lease, you may need to keep your insurance active until it’s paid off and the lienholder is removed — even if you aren’t driving the car anymore.
Switch to a usage-based policy
One option sometimes used by drivers to lower costs is to switch to a usage-based policy. These policies rely on telematics — devices installed in your car that monitor and report your driving behavior — to determine your rates. If you don’t drive much or at all during your policy period, your bill can go down dramatically.
However, usage-based policies aren’t always cheaper. You could pay significantly more than a standard auto insurance policy if you drive a lot. But it could work out well if you drive very little or won’t be driving for several months.
Ask about discounts
If pausing your car insurance policy isn’t an option, ask about car insurance discounts to lower your premiums. Most major and regional insurers offer discounts, such as good driver, defensive driving, automatic payments, multi-car, and bundling discounts. You may have to ask about them because they can sometimes not be automatic.
Remove yourself from the policy
If you’re named as a driver on a policy that’s not in your name, the primary named insured can remove you from the coverage, which will likely lower their car insurance rates. However, you may not be able to drive the vehicles covered under that policy after you’re removed.
Cancel your coverage
You might consider canceling your coverage if you’re getting rid of your car. After all, you’ll no longer have a vehicle to insure. The cancellation process can often be completed online or over the phone. Just ask your insurance company about the process to ensure you do it properly.
Shop around for cheaper car insurance
Whether you’re a new driver or an experienced one, shopping around for car insurance rates can help you save on a new policy. Using an online quote-comparison tool can speed up the process and give you several options to compare side by side.
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