What Happens if I Drop my Car Insurance Coverage?

Firstly, it is important to note that a car must be insured in order to be driven and protected against damages. When planning to be away for an extended period, you may consider dropping your auto insurance coverage. However, this decision should be carefully evaluated based on various factors. If you have a secure private property to store the car and can handle the financial risk of potential loss, it might be possible to save money by not having insurance. Alternatively, for shorter durations, it may be advisable to maintain your existing coverage. Under no circumstances should you drop Liability car insurance, which provides coverage when others drive your car or when it is on public roads. Additionally, keeping Comprehensive coverage is recommended if your car holds significant value, as it ensures protection for your investment.

Temporarily suspending coverage might seem like a viable option to avoid paying insurance premiums when the vehicle will not be used. However, it is crucial to adhere to legal requirements and avoid any issues with the authorities. Typically, individuals must officially declare their car as not in use by submitting a non-use affidavit to the Department of Motor Vehicles (DMV) when dropping mandatory Liability coverage. Failure to do so may result in the current insurer informing the DMV, potentially leading to consequences for the vehicle owner.

Suspending coverage may be suitable for those leaving their cars unused for a certain period or experiencing temporary driving limitations due to injury or other reasons. In such cases, individuals need to assess whether dropping auto insurance entirely would provide cost savings, explore alternative long-term solutions, or maintain the existing coverage. These decisions depend on several factors, personal circumstances and choices. Here are some considerations to assist in the decision-making process:

  1. The location where the car will be stored is the first factor to consider. If the vehicle will be parked on public roads, you must maintain at least the minimum required Liability insurance to comply with state regulations. Remember, the car doesn’t need to be driven; it must simply be removed from the road and kept on private property for the DMV to acknowledge its off-road status. Under no circumstances should it be driven without insurance coverage.
  2. The value of the car is the second point to take into account when contemplating insurance cancellation. If the vehicle is older, it may be easier to store it in a private yard, parking lot, or storage facility without significant concerns about potential damage. However, even when not driven and safely stored, unforeseen events like fire, flood, or vandalism can still cause damage. To protect against such risks, it is advisable to consider maintaining at least Comprehensive coverage. Some insurers may offer this option, which also allows policyholders to maintain continuous coverage and retain any associated discounts.
  3. The duration of non-use is the third aspect to consider. Motorists must initially contact the DMV to complete the necessary paperwork and officially declare their car as off-road. In certain cases, license plates may need to be returned as well. Secondly, they must inform their insurers about dropping coverage or make appropriate adjustments. When they are ready to use the car again, they need to reverse these processes. Therefore, for periods shorter than thirty days, it may not be worth the effort to go through all the administrative steps.
  4. The potential savings from canceling auto insurance coverage is the final consideration. For longer periods, it is possible to save a considerable amount of money, considering that the average cost of full coverage is approximately $2,000, while minimum liability coverage is around $600 in the US. However, it is important to note that letting your policy lapse can make it more expensive to reinstate coverage in the future. Hence, it is essential to carefully evaluate these savings in relation to your specific circumstances.

On the other hand, dropping your vehicle insurance coverage completely and still driving can have a few serious consequences, as discussed below:

  1. In nearly all jurisdictions, driving a vehicle without insurance is illegal. If you’re caught driving without insurance, you may face penalties such as fines, license and registration suspension and even impoundment of your vehicle.
  2. Without car insurance, you become personally responsible for covering any damages or injuries you cause in an accident. This includes property damage to other vehicles, medical expenses for injured parties, and legal fees if you are sued. Depending on the severity of the accident, these costs can be substantial and could potentially lead to financial hardship or bankruptcy. And you may be prosecuted for causing injuries while driving uninsured.
  3. If you drop comprehensive and collision coverage, you won’t have insurance protection for damages to your own vehicle. This means that in the event of an accident or other covered incidents like theft or vandalism, you’ll have to pay for repairs or replacement out of your own pocket.
  4. If you cancel your car insurance policy and remain uninsured for a period of time, you may no longer qualify for the continuous coverage discount when you decide to obtain insurance again.
  5. If you let your car insurance lapse or have a history of driving uninsured, it can make it harder to obtain affordable coverage in the future. Vehicle insurance companies may consider you a higher risk and charge higher premiums or deny coverage altogether.

Before deciding to drop your car insurance coverage, it’s essential to carefully evaluate the potential risks and consider alternative options, such as adjusting your coverage limits or seeking more affordable insurance options. It’s generally recommended to maintain at least the minimum required auto insurance coverage mandated by your state to protect yourself and others on the road.