It is important to understand the options and responsibilities associated with insuring a car that you don’t drive. Factors such as state requirements, the vehicle’s location, and your specific circumstances play a significant role in determining whether insurance is necessary. In this article, we will explore the key considerations when deciding to keep insurance or not on an unused vehicle, as well as alternative options for rarely driven cars.
State Requirements and Liability Coverage:
In virtually every state, liability coverage is mandatory if a car is kept on public roads. This coverage ensures that in the event of an accident, damage and injuries involving the vehicle, there is insurance coverage to compensate for third party losses. Even if you don’t drive the car, liability coverage is necessary to comply with state laws and protect yourself from potential liabilities, unless you take the necessary steps discussed below. Failing to have liability coverage can result in penalties or fines.
Example: Let’s say you own a car that you don’t drive anymore but is parked on the street. Since it is accessible to the public, liability coverage is still required to mitigate the risk of potential accidents involving the vehicle.
Dropping Liability Coverage on an Unused Vehicle:
If you want to drop insurance coverage on a vehicle you don’t drive, certain conditions must be met. Typically, the car needs to be kept on private property, away from public roads. If the vehicle is left on the street or accessible to the public, there is still a liability risk. Additionally, you may need to comply with specific rules and procedures set by your state, such as notifying the DMV and returning license plates.
Example: If you have a second car that is currently not in use and is parked in your garage, you may have the option to drop liability coverage since it is not exposed to the risks associated with public roads. However, it is crucial to check your state’s specific requirements and follow the necessary procedures to ensure compliance.
Informing the DMV:
When you decide to drop insurance coverage on a vehicle, it’s essential to inform the DMV or relevant authorities. Many states require a declaration or notification when you no longer have insurance on a registered vehicle. The DMV may request additional information or documentation, such as an “off-road” form. Failure to comply with these procedures can lead to warnings, fines, and further enforcement actions. Checking your state’s specific requirements will help ensure compliance.
Example: Suppose you decide to drop insurance coverage on a non-driven car that you plan to keep in storage for an extended period. In this case, you should inform the DMV by submitting the required paperwork and following the necessary steps outlined by your state.
Insuring a Never Driven Vehicle in the Garage:
For a vehicle that is never driven and remains parked in the garage, comprehensive coverage may be sufficient. Comprehensive coverage protects the vehicle against theft, fire, flood, and other non-collision events. Since the vehicle is off the road and poses no liability risk, you may not need liability or collision coverage. This can help save on premiums while still ensuring protection for the vehicle’s value and keep your insurance coverage history continuous.
Example: Imagine you own a classic car that you don’t drive and keep securely stored in your garage. Opting for comprehensive coverage alone can provide adequate protection against potential risks such as theft or fire, while eliminating the need for liability or collision coverage since the vehicle is not driven on public roads.
Alternative Insurance Options for Rarely Driven Vehicles:
If you have a vehicle that is driven occasionally or only during specific seasons, there are alternative insurance options available. Insurance companies often offer affordable policies for rarely driven vehicles, particularly if you have another vehicle for everyday use. Classic cars, seasonal vehicles, or those with low usage often qualify for special discounts or lower premiums. Discussing your specific situation with your agent or provider and comparing quotes will help you find the best coverage options for your rarely driven vehicle.
Another option is to buy pay-per-mile or usage based auto insurance that will monitor your mileage and usage and charge you accordingly. This will allow you to drive the vehicle when you need and pay minimal premium for the months you don’t drive it. Another advantage of such policies is that you don’t need to keep contacting the DMV to deregister and reregister your vehicle, which may be expensive and time consuming.
Example: Suppose you own a convertible that you only drive during the summer months. In this case, you may get a pay-per-mile car insurance, which provides coverage during the period when you actually use the vehicle and reduces your premium for the months you don’t use, based on monitored usage. This can help reduce insurance costs while still ensuring protection and legal compliance.
Insuring a car you don’t drive requires careful consideration of state requirements, liability coverage, and alternative insurance options. Whether you choose to drop coverage, keep comprehensive insurance, or explore alternative options, consulting with your insurance provider and checking your state’s regulations will help you make an informed decision based on your specific circumstances.