Auto Insurance – Is it worth insuring a rarely used vehicle?
The quick answer is “Yes”. If you have a vehicle that is registered and tagged for road use, it has to be insured or you may pay hefty fines by the state you live in. We have a lot of customers that have said that they don’t want to pay the high cost of auto insurance for a vehicle that doesn’t get used, so we have come up with a few suggestions on how to handle this scenario.
Adjust the insurance coverage on the vehicle
We are insurance agents, so we would never tell you to reduce coverage, but you are the boss of your insurance policy. If you are not using it, make a few changes to your coverage:
- Remove collision coverage (e.g damage to your vehicle while moving), but keep comprehensive coverage (e.g theft or a tree falling on it)
- Increase your deductibles on collision and comprehensive
- Remove roadside assistance, Towing or rental car reimbursement.
- Consider User-based insurance – You can add a device to your vehicle and the device tracks how often it is being used. This could save you a lot of money on your insurance.
- If it is an older vehicle that is stored in a secure garage, you could buy a collector car policy. Classic car policies are usually less expensive than a regular insurance policy and even provide better coverage.
Consider returning the tags (license plate) to the DMV
If you are not using a vehicle, you could always surrender the license plate to the DMV. Insurance is linked to your license plate. If your auto insurance cancels, the insurance company must notify the Department of Motor Vehicles to let them know that the vehicle is uninsured. If there is a license plate tagged to the vehicle the DMV will send you a fine for being uninsured. However, if you have surrendered the plate, there would be no fines assessed. Just be sure it isn’t a vehicle that is ever going to be used. Also, if it is not insured at all, even if it is stolen and used by a thief, you could be liable in the event of an accident or hit and run because you are the registered owner. Also, anything can happen to the vehicle even when not in use. Theft, flooding,
Just sell it
If you aren’t using it, the Dave Ramsey ELP in me says “Why haven’t you sold it?”. Even if it doesn’t run, you could probably pay off a lot of bills by selling it to a scrap yard. Or, maybe you should donate it to a nonprofit organization and write off the value on your taxes. If it doesn’t run, it’s probably an eye soar on your property or taking up room in your garage. If it has sentimental value, take a picture of it or keep the steering wheel as a keepsake.
Vehicles need to be maintained even when not in use. You need to still run them occasionally, and they still need an oil change. Consider the cost of insurance and maintenance and compare it to the frequency of driving. Is it cheaper to rent a truck or use ride sharing as needed? If so, just sell it.
Is it really that expensive to insure it?
Sometimes it may just be all about perspective. Through the years, I have heard my share of complaints from clients that say their insurance is too expensive. Once we re-quote the insurance, we may find that the current price is the best available. Although it is always a good idea to get multiple quotes from an independent agent, if you have the best rate available, maybe it isn’t too expensive. Maybe, you just need to update your budget. Some customers may change insurance to save less than $100 for the year, but that same customer may be paying over $50 per week at a coffee shop and over $200 per month for cable and internet. Dave Ramsey would probably suggest adjusting your budget.