A common question we get from our clients when it comes to a car, boat, motorhome, or other vehicle sitting in a garage or storage for an extended period of time is “Can I drop the insurance?”.
The answer: “Of course you can. It’s your policy. We’ll do whatever you’d like to do. HOWEVER, that doesn’t mean it’s a good idea, and there are some things you should consider…”
What coverage do you have?
- Liability insurance: This coverage is the coverage required by law in many instances. It is composed of two parts: bodily injury and property damage. Liability insurance covers all “insureds” (typically defined as You, a spouse living in the household, a family member, or anyone using “your covered auto” subject to exclusions) for liability to others due to bodily injury and property damage arising out of the ownership, maintenance, or use of an auto or trailer.
Further, common language as to what constitutes “occupying an auto” defines occupancy as: In, upon, or getting in, on, out of, or off a covered auto”. As you can see, the liability insurance extends to instances in which another person may be inspecting or maintaining this vehicle. Is the car being worked on? Is anyone going to be periodically checking on it, or retrieving anything from it? Is it for sale? Is there any risk at all that it could roll into another object? If so, there may be plenty of reasons to maintain the liability insurance.
Also it is important to note that your insurance company’s duty to defend you is broader than their duty to cover you. This means, even if you only maintained minimum liability insurance, your legal defense is covered in full. Even a false allegation that your vehicle caused harm or damage, can be costly to defend against. We’ve all heard stories of the burglar or car-jacker who sues the property owner.
- Comprehensive or “Other than collision” coverage: This coverage applies to physical damage to the vehicle itself NOT resulting from a collision, and subject to certain exclusions. This coverage would include the perils of: Theft, vandalism, wind, hail, falling objects, fire, smoke, etc. If the vehicle has value to you, but is temporarily in storage, comprehensive coverage may protect you from fortuitous damage.
- Collision coverage: “But I’m not driving it!”. Good point. This is a coverage you can be more lenient with. However, there are instances in which a broken-down vehicle parked on the street or in a driveway, accidentally rolls into someone else’s car or property. If you maintained your liability insurance, THEIR stuff will be fixed, YOUR stuff needs collision coverage, or it will not be. With that said, you can make your own decision based on your comfort level with this coverage.
- Roadside Assistance: Thought you could fix the car, but it’s too big of a job? No sweat! Let’s tow it up to a shop with this coverage!
Do you have a loan?
Ask your lender if you can modify coverage. Many lenders contractually require you to maintain insurance. Until the vehicle is paid off, they have an interest in the existence of insurance.
What is your plan for the vehicle?
- Is it going to be in storage for a long time? If you are going on vacation for a month, It would likely not be worth it to drop the insurance. You may end up paying more buying a new policy for lack of prior insurance. 6 months or more? You would likely be money ahead premium-wise, again, consider the risks and contractual obligations outlined above.
- If this is a seasonal vehicle, like a boat or RV, and you are certain you are comfortable with risks associated with storage, it may make sense to buy a 6-month policy instead of 12.
- If the vehicle is broken down, we generally recommend maintaining insurance until you no longer own the vehicle. Some insurance companies do not allow removal of a disabled vehicle that you still legally own.
Understand that vehicles come with risks even while parked or stored. Questions are always better answered before a loss happens. Always consult with your independent insurance agent if you have any questions. If you need a new independent agent, consider one of us at Aspire Insurance Agency!
Licensed in KS, MO, CO, AR