You are not legally required to have car insurance if you don't have a car. It would be nice if you could just cancel your car insurance while you're not driving your car. However, it's actually not that simple. Not having car insurance can jeopardize your physical and financial health, which could end up costing you much more than any savings on premiums.
Generally, you should take out comprehensive coverage along with collision coverage, but your insurer can make an exception and allow you to maintain a policy that only covers all the risk, also known as “car storage insurance”, if you keep your car for the long term. If you have an auto loan, your lender may require you to maintain both comprehensive and collision coverage. Use this option only if alternative transportation is available. You may have to file an “affidavit of non-use” from your state's department of motor vehicles to suspend state-mandated auto coverage.
This document officially informs the state that you won't be driving your car for a certain amount of time. This option can save you money if you are a riskier driver than the others included in your policy, since leaving the vehicle reduces the chances of an accident occurring. However, if this doesn't save you money, moving has few benefits and it's probably more convenient to stay on the policy. If you're not going to leave and you're still living with other drivers insured on the policy, this may not be an option.
Many companies require that all drivers listed at the same address be included in a policy or, otherwise, be specifically “excluded”. The biggest disadvantage of canceling is that it creates a lapse in your insurance history. Customers with continuous insurance generally get better rates than drivers who have gaps in coverage, who are typically labeled as “high-risk drivers”. If you drive but don't own a car, car insurance for non-homeowners can help you meet your state's minimum insurance requirements for driving legally.
As with a suspension, your state may require you to file an affidavit of non-use to officially remove the car from the road and cancel the insurance required by the state. Insurance agents will be up to date with current insurance requirements and can suggest options tailored to your specific situation. To avoid an interruption in coverage before buying another car, consider getting an auto insurance policy for people who are not homeowners. However, you should call the insurer and let them know that you have purchased a new car so that they can add it to your current policy.
A basic auto insurance policy for people who aren't homeowners provides liability coverage if you're responsible for an accident. Canceling your insurance will also cause an interruption in car insurance coverage, which may mean higher rates in the future. Car insurance for people who don't own a car, need insurance to buy a car, or are listed as drivers on someone else's policy. But before you cancel, it's important to understand that car insurance protects you against more than just driving accidents.
If you already have insurance for another car, your insurance company may automatically cover your new vehicle. Even if you're not going to use your car for an extended period of time, you'll need some level of insurance in most cases. Now isn't the time to pay for things you don't need, and that includes car insurance for an idle vehicle. If you're buying a new car, you can contact your insurance company to add your new car to your current car insurance policy.
They'll most likely find a way to lower your car insurance premiums while protecting you, your car, and everyone else on the road. For example, if a prospective buyer takes the car to a test drive and damages it, your insurance can help pay for the damage. Yes, you can cancel your car insurance after selling it once you've transferred the title to the new owner, completed the bill of sale, and filed a notice of exemption from liability to your state's department of motor vehicles, if your state requires it.
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