Do You Need Insurance on a Car that Doesn’t Run?
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If your car has broken down or you’ve recently acquired an old car that doesn’t run yet, you’re probably asking yourself, “Do I need insurance on a broken down car?” In short, yes, you do. Most states require all vehicles to have a legal minimum car insurance level even if a car isn’t being driven—but between state laws, car registration, and the option to suspend car insurance temporarily, the answer is more nuanced than a simple yes.
While it’s frustrating to pay for insurance on a car that doesn’t run, choosing to stop paying for car insurance or avoiding insuring a car altogether will oftentimes be a bigger waste of time and money than just insuring the vehicle to begin with.
However, there are many options for making sure your car stays insured while it’s not in use without paying the expensive premiums of a regular insurance policy.
Already Have Insurance? Here’s What to Do if Your Car Breaks Down
Most states have laws that require every car to be somewhat insured whether or not it’s in use or even functioning properly. The two states who don’t abide by these same laws are New Hampshire and Virginia, where drivers aren’t required to have insurance coverage (but are required by law to accept all costs associated with their vehicles, including any personal or property damages caused during an accident).
If you’re living in a state that requires insurance and your car breaks down, you’re left to either continue paying your usual fees or take action—cancel your car registration and surrender your license plates, suspend your car insurance temporarily, or reduce your coverage.
Cancel Car Registration Before You Cancel Car Insurance
People who have another car to drive than the one that breaks down often think they’re doing the right thing by canceling insurance so it doesn’t come across that they’re evading payments, but canceling your car insurance before your car registration can have disastrous effects. Your local Department of Motor Vehicles (DMV) will see this as an attempt to break the law and assume you’ll attempt to drive while uninsured.
By not canceling your registration and surrendering your license plates beforehand, you run the risk of your registration being suspended and your license plates invalidated, making it difficult to re-register the vehicle and regain auto insurance in the future, which you’ll need to do. Choosing not to do so and using the car when it’s running again can result in:
A suspended license
Taking the route of canceling your car’s registration and insurance means you’re committing to not driving the car for the foreseeable future, if ever again. Otherwise, going through the steps of re-registering and re-insuring your vehicle won’t be worth it.
Having a gap in coverage will make the cost of your insurance policy go up in the future, wasting the time, energy, and money you put into this process. Before you cancel your car insurance, see our guide on how to lower car insurance rates.
Temporarily Suspend Your Car Insurance
Suspending your coverage is an option that allows you to pause your coverage without it being viewed as a cancellation, preventing this time being identified as a lapse in coverage and raised rates later on.
This option isn’t available through every carrier, so you need to contact your insurance company to make sure this is an option, and if it is, to also receive direction as to what steps need to be taken to enact a suspension.
Depending on your state laws, you may need to file an affidavit of non-use from your local DMV to be allowed to bypass your state’s auto insurance requirement. This is an official statement letting your state government know that you agree to not operate your car for a specified period of time.
However, there are some negative aspects to be aware of before choosing to suspend your car insurance coverage. Here are the downsides, according to NerdWallet:
No one can legally drive your car while your insurance is suspended
The car won’t have protection from non-driving issues caused by fire, animals, vandalism, or theft
People with car loans are usually ineligible
Potential Barriers to Dropping Your Coverage
In the case of a vehicle that’s not functioning, the loan holder may require that you maintain full insurance coverage even though you won’t be on the road. This is because the loaned car could still be hit by another vehicle, stolen, or damaged by harsh weather conditions.
It’s nearly impossible to drop your coverage down if you don’t own the vehicle yourself. Leased and financed cars are technically owned by someone else, meaning that the rightful owners won’t want to take any risks. Even if you do own your car, you could still be facing issues if the broken down vehicle was the only fully insured car on your insurance plan.
You will usually need a policy with at least one insured vehicle meeting your state’s minimum car insurance requirements in order to drop another car’s coverage down. The other insured vehicle doesn’t have to be under your name, but does have to be on the same policy. For more information see our guide on Does Your Car Insurance and Registration Have to Be Under the Same Name.
Multiple-car families, according to The Balance, can drop their coverage on one vehicle if no one is driving it.
Reduce Your Car Insurance Coverage
If your car breaks down and you don’t plan on driving it for a while, you may want to remove the parts of your insurance that deal with accidents and damages and non-driving coverage, such as:
Liability insurance – This is the most basic form of car insurance, but it doesn’t cover you or your car in an accident, it only covers the bodily injury and property damage you caused to others, neither of which you’ll be needing if you’re not driving.
Collision insurance – Since you won’t be on the road, you won’t have to worry about damage to your vehicle caused by uninsured or hit-and-run drivers, potholes, hitting fixed objects like a tree, or totalling your car.
Comprehensive coverage – This protects your car from natural disasters, theft, and vandalism, so if you are able to keep your car in a private, secure garage, this may also be a policy to temporarily get rid of.
By contacting your insurance agent to see what options are available to you, you’ll be able to scale back your coverage appropriately. Another option is to look for new policies that are better suited for your situation. Using an online rate comparison tool, you’ll have access to hundreds of quotes across multiple carriers, and forgo your old policy altogether for one that’s a better fit.
You will have to contact your old carrier to cancel your car insurance with them, but you won’t have to cancel your car registration, assuming you are switching directly from one to the other.
Parked Car Insurance
If you’re worried about where you’d be leaving your broken down car that won’t make comprehensive coverage necessary, consider dropping only liability and collision coverage. This is what’s often called “parked car insurance,” but is known to insurers as storage coverage. While you’ll need to check your state regulations first to make sure there aren’t any specifics you need to adhere to, storage coverage is pretty straightforward.
You won’t be allowed to park your vehicle on any public roads, but it will provide protections from the following:
Natural disasters – Hail, lightning, floods, hurricanes, tornadoes, and earthquakes.
Falling objects – Trees, rocks, or debris dislodged from a natural disaster.
Animal interactions – While hitting an animal won’t happen since you’re not driving, this will still cover animals who run into your car.
Damage caused by people – Theft, vandalism, or civil disobedience like riots.
In many cases, this policy will also pay to repair glass damage to your windshield. If there’s any doubt about the safety of your parked vehicle, you should absolutely get storage coverage for protection.
Find the Right Amount of Coverage with Online Auto Insurance
If you’re unable to drop your coverage down on your car because you’re a single-car family or the sole member of your insurance plan, or can’t suspend your coverage because of your policy, then you should look into leaving your insurance company. In order to cancel your car insurance and not have a lapse in coverage, you need to have another policy on deck, ready to go.
With so many types of car insurance to choose from and confusing variations in state regulations and individual policies, you should contact an insurance agent to get advice on your specific situation before taking any action. No matter what, it’s safe to say that choosing to go without any car insurance for a vehicle that’s broken down or unable to run isn’t the best choice.
If you’re not able to drive your car, don’t waste your money by being overinsured. Make your life easier with Online Auto Insurance, a trusted partner of insurance providers across the nation. You can compare car insurance quotes from multiple insurance carriers simultaneously, for free, making sure you find the exact coverage you need at the best price.
For more auto insurance information, check out our blogs answering all of your car insurance questions. There you can learn how to cancel car insurance, how to utilize temporary car insurance, and everything you need to know about buying a new car and insurance grace period.
NerdWallet. How to Pause, Cancel, or Reduce Your Car Insurance. https://www.nerdwallet.com/blog/insurance/how-to-suspend-your-car-insurance/
The Balance. Do I Still Need Insurance for a Car That Doesn’t Run? https://www.thebalance.com/my-car-broke-down-do-i-still-need-car-insurance-3972384