What is car storage insurance?
Parked car insurance
While some may refer to it as “parked car insurance,” most car insurance companies instead offer "storage coverage" as an interim solution for a car that won't be in use for an extended period of time. Storage coverage is oftentimes a much better solution than canceling your coverage altogether. Be aware, however, that state and insurer-specific regulations will apply in any long-term car storage coverage situation, so it's always best to do your homework beforehand.
- Car storage insurance can lower your rates by as much as 80%
- Car storage coverage is typically just comprehensive coverage (no liability)
- Each state and insurer has different regulations regarding parked car coverage
- Vehicles still being paid off may require additional coverages depending on loan requirements
What is car storage insurance?
If you have a vehicle you only drive at certain times of the year — or are simply not driving for some length of time — the idea of car insurance for a parked vehicle is appealing. Insurance companies offer “storage coverage” to accommodate these scenarios. With storage coverage, liability and collision coverages are dropped, leaving comprehensive-only coverage. A car storage insurance policy will only protect against the following damages covered under a typical comprehensive coverage claim:
The idea of storage coverage is to keep your vehicle parked in one place, ideally in a locked garage and off the street. Car storage insurance will drop your premium significantly — sometimes by as much as 80%. Storage coverage applies to vehicles used irregularly, cars in need of repair, or an auto owned by a deployed military member. It's a way to "suspend" your auto policy if you won't be driving or using your vehicle for a period of time (such as winter or summer). Rather than going without insurance and risking higher rates due to a lapse, finding a comprehensive-only policy ensures you maintain insurance history while not driving. The potential downside of storage coverage relates to state vehicle registration laws.
Excluding New Hampshire, all states require drivers to carry at least minimum liability insurance as part of their car insurance policies. If you drop this important insurance coverage, you risk license and registration suspension. The workaround for this is to cancel your registration, remove the vehicle from public roads, and follow the necessary protocols required by your state and Department of Motor Vehicles (DMV).
Your insurance company might require you to insure another vehicle to meet your state’s minimum liability requirements.
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Can you pause car insurance?
Pausing or suspending your auto coverage may sound appealing to those who don't drive often. However, from an insurance standpoint, it's not the best idea.
Car insurance companies don't allow you to simply suspend and resume coverage as you like. The only way to fully stop making payments would be to cancel coverage it altogether, which comes with its own downsides.
Cancellation can lead to increased insurance premiums when you eventually search for a new policy. Insurance providers would rather you strip your coverage to a bare minimum instead of giving it up altogether. Consider lowering your coverage limits to the minimum or, if you have the means to safely store the vehicle in a garage, consider a much cheaper car storage policy.
Bear in mind that you are still likely required to carry full coverage if you are still paying on a car loan. Full coverage — a combination of collision and comprehensive insurance — protects your vehicle against physical damages and is a way that lenders ensure that their investment is protected.
Reducing coverage: pros and cons
- Save money by eliminating unneeded coverage
- Avoid higher insurance costs by maintaining continuous coverage
- Less coverage leaves your vehicle at risk
- The vehicle may not be useable in some situations
- Some coverages may still be required if you are paying off a loan
Do you need to insure a parked vehicle?
There’s a couple of things to think about here. If your vehicle is registered with your state and parked on a public road, it needs to be insured for at least your state’s liability limits. For example, if you were living in Texas, you would need the following coverage limits in your auto insurance policy:
- $30,000 of bodily injury protection per person
- $60,000 of bodily injury protection per accident
- $25,000 of property damage protection per accident
The next thing to consider is the risk of owning an uninsured financial asset. If you’re parking a car temporarily, it won't be insured against damages from a hit-and-run accident.
What happens to insurance when someone hits your parked car?
If someone hits your parked car — that is not in storage — you would simply handle this situation as a regular claim. If your vehicle has comprehensive-only protection, the situation is much different. Because a stipulation of storage protection is to keep your vehicle away from other cars, you have no protection in a hit-and-run scenario. There are a couple of reasons for this:
- This coverage is designed to be cost-efficient. By keeping collision insurance or uninsured motorist coverage on the insurance policy, you would save significantly less.
- By removing your liability coverage, you’re not legally allowed to park your vehicle on a public road. If your vehicle is secured, as it should be by the policy stipulations, it’s very unlikely it will be hit by another vehicle.
If someone does hit your vehicle but they have insurance, you would file a claim under their liability property damage coverage.
How to get parked car insurance
At the end of the day, car insurance for a parked car will involve calling your insurance company and seeing if they offer this coverage as an insurance option. Many companies require that your car is in storage for a minimum of 30 days to qualify for parked car insurance. Still, here is a simplified step-by-step process for getting car insurance on a parked vehicle.
- Have an established policy with a "fully" insured vehicle: Usually, you will need a vehicle that is insured to at least your state's liability limits in order to drop another vehicle's coverage down.
- The vehicle needs to be owned. You will not be able to drop your coverage to "storage" or "non-use" if you're leasing or financing the vehicle, as you will be in violation of your lease agreement. Because you do not technically own a leased or financed vehicle and another entity does, you're required to keep the vehicle insured.
- Cancel your registration. While some states do not actively monitor registration requirements, the majority do. If you do not cancel your registration but drop your liability coverage, you risk being fined.
If your current insurance company does not offer parked car insurance, consider that as an opportunity to shop around for new car insurance quotes. Many auto insurers offer this cost-cutting solution and going without insurance can leave you vulnerable to unnecessary out-of-pocket expenses and a hike in insurance rates following a lapse.
This is a specialized coverage that you'll likely need to call around and inquire about, as most insurance companies do not offer online quotes for car storage insurance and your state may have protocols for handling your registration if you'll be going without mandatory liability insurance. GEICO is one of the best-known carriers offering this coverage as part of its Storage Protection Plan, which is geared towards military members set to serve overseas. However, to get this coverage, drivers must call to request it.
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