Do I Still Need Insurance for a Car That Doesn't Run?

Old car that doesn't run with flat tires and missing a windshield
••• mgkaya / Getty Images

If your car breaks down and you are on a high-deductible policy, or if you're self-insured in a state that allows it, repairs can be very costly. When you're on a tight budget, you may need to wait a few months before you can afford to make the repairs. Since a major car repair can be financially crippling and car insurance is expensive, you may wonder if you can drop your insurance for a while.

Circumstances can vary greatly, and so can the answer to the question. But in most cases, it’s not a great idea to cancel your insurance, even for a broken-down car.

Multiple-Car Family

If multiple cars are insured on the same policy, and one breaks down, the answer is no. You do not necessarily need to insure the car needing repairs while it is not being used. If absolutely no one is driving the broken car, you may be able to drop it.

However, if your current policy protects the vehicle in the event of a flood, fire, theft, or other non-driving damage, then canceling would be a risky move. Furthermore, in some states, state law generally requires that any registered vehicle be insured.

One-Car Family

If your only vehicle is down and out, you will need to maintain car insurance in one form or another. Decide how to stay insured based on how long it will take to repair or replace your car. You might be able to reduce the amount of coverage you take until you’re ready to drive it on the road again.

What If You Have An Outstanding Car Loan?

In most cases, if you have a loan on your vehicle, your lender will require full coverage, no matter what the circumstances are. While it may seem unfair, financial institutions want to protect their investment, and a car that’s not being used could still fall prey to storm damage, get hit by another driver, or be stolen. Though lenders are sometimes able to obtain third-party car insurance on the vehicle and send you the bill, it is much cheaper both long- and short-term to maintain your policy.

Alternative Coverage Options

Changing your insurance to comprehensive-only or storage insurance may be a possibility if your car needs repairs or if you have an alternate vehicle driven on the same car insurance policy. Remember, you will usually need to insure a car to your state's legal coverage limits, which includes carrying liability coverage—in all states but New Hampshire. Dropping liability coverage would be okay on a second car if your first was fully insured, to fulfill your state's legal requirements. In other cases, insurance carriers may insure the car comp-only, and only for a limited time, or under strict locked storage requirements.

Remember that dropping liability coverage means your car can't legally be driven on public roads. But comprehensive coverage will continue to protect the vehicle against physical damage while it is stored and not in use. Fire, theft, vandalism, and storm damage would all be covered.

Ways to Reduce Car Insurance Costs

If maintaining your current insurance is too expensive, there are a couple of options to check out. You could try to get added as a driver to a relative or friend's car insurance while yours is canceled. Or, you could purchase a named Non-Owner car insurance policy. That's a policy with no vehicle attached. It typically covers bodily injury and property damage liability coverage only.

Although it may sound counterintuitive, it is usually the cheapest to maintain car insurance on the vehicle needing to be repaired. Canceling your car insurance can be very costly. A good rule of thumb is never to let your car insurance lapse since a gap in coverage means you will be considered high-risk the next time you need insurance.

It may seem useless to pay car insurance on a vehicle you cannot drive; however, it is usually the cheapest solution.

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Article Sources

  1. Insurance Information Institute. "Background On: Compulsory Auto/Uninsured Motorists." Accessed Aug. 17, 2020.

  2. Allstate. "Do I Need Insurance for a Car That's in Storage?" Accessed Aug. 17, 2020.

  3. Progressive. "Force-Placed Insurance." Accessed Aug. 17, 2020.

  4. Insurance Information Institute. "Is it Legal to Drive Without Insurance?" Accessed Aug. 17, 2020.

  5. Progressive. "What Is Comprehensive Insurance?" Accessed Aug. 17, 2020.

  6. Texas Department of Insurance. "Automobile Insurance Made Easy." Accessed Aug. 17, 2020.