If you don’t use your car, it seems strange you would buy auto insurance for it. But there are scenarios when you might need to purchase a policy. Even if you don’t drive it.
For Michael Lacy, he has a company car that he uses for personal errands. So his own car sits in the garage for weeks at a time.
Even though he owns the car — a 2013 Chevy Malibu —outright and there’s no lender that requires full coverage, he kept the comprehensive coverage just in case of damage that might occur to his car while it’s sitting in his garage.
“Those are expensive repairs that I wouldn’t have any control over,” says Lacy, who is a 30-year-old wealth coach and founder of Winning to Wealth. “It’s simply not worth the financial risk, and the peace of mind is certainly worth it for me.”
Here’s why you might consider getting car insurance if you don’t drive your car:
When to consider comprehensive insurance only
If you don’t really use your car, you can do what Lacy did and only purchase a comprehensive car insurance policy.
Comprehensive insurance covers your car against anything other than collisions.
Think of it as protecting your car from:
- Contact with animals
- Riots and vandalism
- Natural disasters such as hail, hurricane, tornadoes, theft
- Fallen objects such as a tree or ice
- Broken windshield
Fun fact: It even covers damage to your car if hit by an asteroid.
In other words, comprehensive insurance covers anything that could damage your car that wasn’t caused by a collision.
Liability insurance is mandatory in most states, but comprehensive insurance is optional. You might opt for comprehensive insurance because it protects your car from these disasters that could happen even when it’s sitting in a garage for months at a time.
The average annual cost of comprehensive insurance policy is $136. In Lacy’s case, he pays $98 every six months for the policy on his car.
And because the comprehensive insurance tends to be far less expensive than collision insurance, you might consider tacking it onto your existing coverage.
Here are some scenarios and reasons why you’d want to consider getting comprehensive insurance on a car you aren’t driving:
If you’re leaving your car in a locked storage facility
You might leave your car locked up in storage because you’re:
- Traveling for work for an extended period of time
- In the military and have been deployed
- A car collector and only use some cars during certain seasons
- Waiting for your car to get repaired
If you only purchase comprehensive insurance (sometimes this is called “car storage insurance”) and keep your car in a residential garage or in a locked storage facility, you’ll need to follow certain rules.
The major one? All states in the U.S. except for New Hampshire require that you have liability insurance on your cars. Otherwise, you risk having your license and registration suspended.
However, there are ways you might be able to work around not having liability insurance:
- Your car can’t be financed or leased. You’ll need to own it outright.
- You’ll need to drop the registration on your car
- Can’t have it on a public road. It needs to be safely tucked away in a residential garage (not a public garage) or a locked facility.
Note: Let’s say your car only has comprehensive insurance, and someone hits your parked car and doesn’t leave a note, you’ll be on the line for covering the damages out of pocket.
If you’re insuring the car for someone else to use
What if you’d like someone else who isn’t listed on your policy to drive your car? Maybe it’s the teenage daughter of a family friend who is learning to drive. Or a friend who would like to borrow it for a weekend trip. Or a trusted neighbor whose car is in the shop and would like to borrow yours.
Even if your car is sitting in your garage, and someone else who doesn’t live in your household drives your car, you’ll want to make sure you have liability insurance.
In these situations, look into the permissive use coverage in your policy. This is when someone who isn’t on your policy can use your car. However, it typically only allows for a small handful of uses per year. Not all insurers include this, so you’ll want to double-check and see if permissive use is baked into your policy.
Remember: If someone is driving your car and they’re not listed on your policy, your car insurance is responsible for covering damages to the car as well as to other people’s property, not theirs.
However, if damage to your car exceeds your policy’s coverage, the other driver’s coverage might kick in as some car insurance coverages follow the driver. (You can read more about whether car insurance follows the car or the driver here.)
Considering canceling your car insurance? Think again.
You might want to consider having comprehensive insurance on a car you’re not driving simply because it’ll help you save on insurance premiums.
When you cancel insurance on a car, insurers will categorize you as a high-risk driver as you will have a lapse in coverage. Since auto insurance is mandatory in almost all states, you could face fines and encounter difficulties obtaining insurance in the future.
Even if you don’t have trouble getting insurance in the future, you will be charged more for coverage. Insurance companies value drivers who have continuous coverage. And you will have a lapse in coverage.
There might be some exceptions, such as being deployed in the military and leaving the country for a few years. But in most cases, you’ll want to think twice before letting your auto insurance lapse.
Do I need car insurance if I don’t drive my car?
It might be cheaper to keep minimum liability coverage on your car, or opting for comprehensive-only insurance.
“Most insurers will work with you if you communicate your situation, but you can be penalized with higher than normal monthly payments after returning from a lapse in coverage because you can be seen as high risk,” explains Lacy.
“I don’t want to end up paying more over the long-term when I no longer have a company car and need to re-insure my own.”
If you’re on a budget and want to get the barebones coverage, consider getting comprehensive-only coverage with higher deductibles. In turn, the cost of your monthly premiums will get bumped down.
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