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Cancel the insurance or reduce coverage to save money

Canceling or suspending your car insurance saves money if you have an out-of-use vehicle. However, if you lease or are financing your car, your lender may require coverage — so you can’t completely cancel car insurance, even if you aren’t driving. 

Also, if canceling now means you will have a lapse in coverage, your premiums could be more expensive when you resume coverage in the future. If you are temporarily not using your car, it may be better to reduce your coverage to the minimum required instead of canceling your car insurance entirely. 

What is the difference between canceling and suspending coverage?

If you cancel your insurance, you have no coverage at all and will have a lapse in coverage that can cause increased premiums if you need car insurance down the line.

If you suspend your coverage, it pauses your coverage and avoids having a lapse in coverage. Unfortunately, your car isn’t covered in the event of theft, fire, or other damage.

If you finance your car, your lender may not allow you to cancel or suspend your car insurance.

Drawbacks to canceling car insurance

Even if you own your car completely and you aren’t driving, you still might not want to cancel. Drawbacks include:

  • Increased premiums later on. If you cancel your car insurance and later decide to get coverage, your premiums will increase for the lapse in coverage during the time you were uninsured.
  • Lack of coverage for events that can happen at home. Even if you plan to store your car in the garage, you will still need some type of coverage in case of theft, fire, or storm damage.
  • State requirements. States require some type of insurance coverage for vehicles. Unless the car is totaled, any vehicle still registered with your state’s department of motor vehicles may still need coverage. 

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