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Each day, you use the same car. However, you own two vehicles. One does not get much time on the road. You may be thinking about dropping your auto insurance on that car. Is doing so a wise decision? image of classic car

It could be, depending on how you use the vehicle. There are some big risks, though, to dropping all your car insurance, even on a little-used car. Here are a few more key details.

Dropping Insurance Means a Lack of Protection

Removing all your auto insurance on the vehicle is a big risk. Just because the vehicle does not go on the road does not mean it is not at risk. If someone slashes the tires or vandalizes the car in the driveway, your comprehensive auto insurance can still cover it. If a tree branch falls on it during a storm, you may have comprehensive coverage as well. However, if you remove your car insurance coverage, you may not have any protections in place.

What’s Best Then?

  • You may not need liability insurance. If the vehicle does not operate on the road at all, you may not need to have a policy for liability insurance. However, your state likely requires liability coverage on all registered cars. So, even if you don't need it, you might have no option to decline it.
  • You may not need collision insurance. Again, as long as you do not move the vehicle, you may not need this coverage. However, if you take the car out and wreck it, you might have no coverage.
  • You should maintain comprehensive auto insurance. If the vehicle has value to you, this type of coverage protects against losses that are unavoidable.

Do You Have a Loan on the Car?

 One key time when you cannot drop or reduce your auto insurance coverage on an unused car is if you have a loan on it. Nearly all lenders require the owner maintains comprehensive coverage on the car. It is part of the agreement you sign with your lender at the time of securing the loan.

Getting New Coverage May Cost More

Dropping your car insurance for a short amount of time may be costly as well. Just because you had coverage at one point does not mean the insurance company will provide the same low-cost policy to you again. If your car is likely to be on the road in a few months, maintaining the same policy may be less expensive in the long term.

If you are unsure where your vehicle falls in this category, contact your insurance provider at 800-220-8006. Discuss the risks of dropping the policy.

Posted 1:13 PM

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NOTICE: This and all content is developed from sources believed to be providing accurate information. The information in this material is not intended to be used as tax or legal advice. Please consult with a tax and/or legal professional for detailed information regarding your individual situation. Some of this material was developed and shared by AssuredPartners - Mount Laurel to provide information that may be of interest. AssuredPartners - Mount Laurel is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.
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