Should I cancel my policy if I sold my vehicle and won't be getting another car for a month?

I sold my car to get more money than I would on trade-in value, but the check from the buyer won't clear my bank for about 2 weeks or more and I can't buy a new car until that money is available. It doesn't make any sense to me to keep paying for insurance on a car I don't own any longer but my parents said that I should keep it active until I get a new car. What is the point?

Mar 9, 2016 Lincoln, NE

Neil Richardson

Mar 9, 2016

Canceling your auto insurance when you sell a vehicle sounds like a good idea until you realize the potential pitfalls of doing so. While it may not make sense to maintain auto insurance when you no longer own a vehicle, consider the fact that you still have to have insurance to test drive a vehicle that you are thinking about purchasing. There is also the issue of losing your continuous insurance discount by cancelling your policy. If you do this then your rates will be substantially higher when you get a different vehicle and need coverage. If you will be purchasing another vehicle within a month or so then continuing to pay for your policy is a smart idea. If you will be without a vehicle for longer than a month, consider purchasing a non-owners insurance policy to maintain coverage between vehicles, retain your prior insurance discount, and stay covered while you are borrowing or test driving a vehicle.

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