The ability to suspend your auto insurance to save money depends on your state, lender or insurance company's rules. States differ in terms of insurance requirements, but you may have to return your plates if you suspend your coverage and no longer have use of the vehicle. Before canceling your car insurance, consider your lender (if you have one) and whether or not you'll need to use other means of transportation.
Your State's Policy Requirements
Most states require registered vehicles to be covered under a liability policy. This type of policy provides no coverage for your vehicle but instead pays for damage to other people or property if you are at-fault in an accident. For this reason, you may have to return your plates before suspending your insurance policy. Call your state's department of motor vehicles to ensure you follow its rules. If you cancel your policy without returning your plates, your state can suspend your license or enforce fines.
Lender Requirements
Many lenders require collision coverage until a loan is paid off. It is not likely that you can suspend your full coverage insurance without paying off the loan. Call your lender to find out if you can maintain comprehensive insurance if you return your plates. Banks differ in requirements, but a lone comprehensive policy can save you money. A comprehensive policy covers damages to your vehicle that occur from theft, vandalism, fire or weather damage. This policy is cheaper than full coverage or even a liability policy, but you won't be able to drive your car.
Insurance Company Contact
Even if you own your car outright, you might still face insurability issues. Insurance companies rate risk differently. If you do not have continuous insurance coverage, your next policy purchase might prove more expensive. Also, if you recently purchased the policy you currently have, your payment remains consistent throughout the policy term, whether it is six months or one year. If you have a ticket or loss during this time, which will cause an increase in the policy cost, this increase won't occur until your policy is reassessed or at the end of the policy term. Talk with your insurance provider to determine if your policy cost will change.
Alternative Means of Transportation
If you return your vehicle's plates, expect to use other forms of transportation for work, school or shopping. Consider the costs you'll incur to get around, such as public transportation, cabs, car pooling or even borrowing a car. Expect to provide money for gas if you car pool or borrow someone else's car. If you live in a city and can utilize buses, trains or subways, the costs can add up. Compare your monthly cost of car insurance to transportation expenses to ultimately make your decision.
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