Maybe you’ve just bought a new car and you’re not driving the gas guzzler. You’re thinking of selling it on Craigslist or restoring it—when you find the time. But, it’s important to be aware that not maintaining insurance on a car you still own can bring problems you might not have considered.
You have an outstanding car loan or lease agreement
Even if you’re not driving your vehicle, the lender may require you to carry minimal coverage to protect the vehicle against damage or theft.
State requirements to maintain car insurance
If your car is registered, almost every state requires you to maintain minimal liability insurance. Insurance carriers are required to alert the Department of Motor Vehicles when car insurance is terminated – you may be required to prove you are not driving the car once you’ve canceled coverage. In addition, car registration is commonly accepted as proof of ownership, so it’s a good idea to always keep your car registered.
Vandalism, natural disasters and theft
Even though your car may be under lock and key, in addition to vandalism and theft, it can still be vulnerable to natural disasters such as floods or fire. To safeguard against these risks, you should keep comprehensive insurance coverage on your car.
Property damage and/or injury to an individual
Picture a scenario where your parking brake fails and your car slides down a hill and smashes into something, or even strikes someone. Your car’s liability insurance will cover bodily injury to others and property damage to other cars or fixed objects, such as a light post or a wall.
Higher future premium costs
If this is the only vehicle that you have insured and the policy is canceled, you’re looking at higher premiums when you do need insurance coverage. A lapse in coverage triggers a red flag for insurance companies when determining premiums.