Have you moved out of state and think you need a new auto insurance policy? Are you trying to save a little money and thinking that canceling your auto insurance is the way to go? While it may seem like a good idea for a vehicle that you don’t drive, you may regret it down the road.
Stopping the payments on your policy, without notifying the company is even worse. If you do no contact your insurance company, then your carrier will cancel your policy for you. Having an insurance policy canceled can lead to several issues for you down the road including problems trying to start another policy later and a bad tick on your credit report.
Before you decide to cancel your auto insurance, consider a few consequences and alternatives which may be better for you in the long run.
- Cancelled Registration – Many states now require you to cancel your vehicle registration if you are no longer carrying insurance on a vehicle. Reinstatement costs for you registration may be more than the any savings you will receive.
- Lenders Require Insurance – If you owe money to the bank on your vehicle you may be required to keep insurance on it, even if you do not plan on driving it. Lenders require that you minimize their risk of loss by carrying insurance and if you cancel they may go ahead and slap a policy on it for you which will cost you much more than one you get yourself.
- Risk to Your Finances – If anything damage occurs to your vehicle once you have removed the insurance, you will be stuck with paying the full cost of repairs out of your own pocket.
- Rate Hikes – When you are ready to restart your insurance, you may suddenly find that your rates have doubled or even tripled because of a lapse in coverage or cancellation for non-payment. Plus, you will lose the continuous coverage deduction you may otherwise receive.
Instead of canceling your auto insurance it may be better for you in the long run to drop your coverages down to a minimum and more affordable level. Low cost car insurance may be a better alternative. Even if you do not plan on driving your vehicle for a stretch of time, at least it will be covered should any damage occur while it is parked. If you suddenly need to drive it, at least it will be minimally covered.
Think twice before letting that auto insurance policy go. You may not experience the savings you thought you would.
