How to reduce your car insurance costs during the coronavirus pandemic

Amid a pandemic, it’s no time to pay for things you don’t need, and that includes car insurance for an idle vehicle. 

You might be thinking about how to ditch your auto policy if you own a car you never drive — and whether it makes more sense to cancel the policy or suspend it temporarily. 

Putting your car insurance on hold can be a good way to save money if you have an out-of-use vehicle. But it’s not as easy as halting your Netflix subscription. In addition, your options may be limited depending on why you’re taking a hiatus from driving the vehicle or whether you have a car loan. If you still use the car at all, you’ll want to keep it insured to stay legal and financially protected.

If you’re experiencing financial hardship because you lost work due to the coronavirus, insurers and other financial institutions are likely to be lenient.

Where it concerns your auto insurance, there are five main options to explore:

1. Request a coronavirus-related payment delay or plan.
2. Suspend your coverage.
3. Cancel your policy.
4. Reduce your coverage.
5. Remove yourself from a policy.

1. Coronavirus-related payment delays or plans

Many auto and home insurers are willing to work with customers financially affected by the coronavirus. Depending on your auto insurer, payment assistance can take many forms:

• Pausing cancellations due to nonpayment of premiums.
• Special payment plans, including delayed payments, for coronavirus-related financial hardship.
• Custom payment options on a case-by-case basis.

No matter who provides your auto coverage, the best thing to do is alert the company before your bills are late — here is a list of financial institutions’ contact information you may need.

2. Suspending your auto insurance coverage

Pros

• You won’t pay for insurance while your car is out of use
• You likely won’t have a coverage lapse, something that could increase your future rates

Cons

• The vehicle won’t be covered if anyone wants to drive it
• The vehicle won’t have insurance against non-driving problems like fire, animal damage, vandalism or theft
• Drivers with car loans typically are ineligible

Suspending coverage essentially pauses your policy but doesn’t cancel it. That way, you can probably prevent your hiatus from being called an insurance lapse, which would likely result in higher rates later. Confirm this with your insurer beforehand.

Companies don’t always let customers suspend coverage, or might allow it only in certain situations. If you anticipate being out of work due to coronavirus for longer than your insurer’s available grace period or payment plan terms, the company may suggest this option. However, pausing coverage will leave you uninsured while you’re looking for work.

Only use this option if you have alternate transportation available. You may need to file an “affidavit of non-use” from your state’s department of motor vehicles to halt state-required auto coverage. This document officially lets the state know that you won’t operate your car for a given time.

Suspending your policy probably isn’t an option if you have a car loan. Lenders generally require that you maintain coverage for problems such as theft and vandalism.

3. Canceling your policy

Pros

• You won’t pay for insurance while your car is out of use
• You can cancel your car insurance regardless of your insurer

Cons

• The vehicle won’t be covered if anyone wants to drive it
• The vehicle won’t have insurance against non-driving problems like fire, animal damage, vandalism or theft
• You’ll have a coverage lapse, which could increase your future rates
• Drivers with car loans typically are ineligible

You could consider canceling your auto coverage and getting a new policy when you’re ready to drive the car again. However, like suspension, cancellation probably won’t work if you have a car loan. Your lender likely will want at least some insurance on the vehicle.

Contact your DMV if you’re thinking about canceling. Similar to a suspension, your state may require you to submit an affidavit of non-use to officially take the car off the road and drop state-required insurance.

The biggest downside to canceling is that it creates a lapse in your insurance history. Continuously insured customers generally get better rates than drivers who have coverage gaps, who are typically labeled “high-risk drivers.”

4. Reducing your coverage

Pros

• You won’t pay for unneeded insurance while your car is out of use
• You won’t have a coverage lapse, something that could increase your future rates
• If you keep comprehensive, your car will be covered for non-driving problems like fire, animal damage, vandalism and theft

Cons

• The vehicle might not be usable if anyone wants to drive, depending on how much you scale back coverage
• You’ll have to pay for the insurance you keep
• You’ll likely have to keep certain coverages if you have car loan

Cutting back coverage is a good alternative if you’re not eligible for suspension and don’t want to cancel your policy.

To start, you can reduce your auto insurance to the coverage required by your state. Almost every state requires liability insurance, and others mandate uninsured/underinsured motorist coverage, personal injury protection and/or medical payments coverage.

Consider keeping comprehensive insurance (or adding it) if you are storing the vehicle while you don’t drive it, in case it suffers damage while stored. Comprehensive pays to replace your car if it’s stolen, and it covers nondriving problems such as vandalism and damage from falling objects.

Ordinarily, you must buy comprehensive along with collision coverage, but your insurer may make an exception and let you keep a comprehensive-only policy, sometimes known as “car storage insurance,” if you’re storing your car long term. If you have a car loan, your lender may require you to keep both comprehensive and collision coverage.

If your insurer allows you to keep comprehensive and drop everything else, including liability insurance, contact your DMV. You may need to file an affidavit of non-use because your car would no longer have enough insurance for anyone to drive it legally.

5. Removing yourself from the policy

Pros

• The vehicle will be covered for non-driving issues like fire, animal damage, vandalism and theft
• The vehicle will still have the insurance needed to drive it legally 
• You likely won’t have a coverage lapse, something that could increase your future rates

Cons

• You’ll have to pay for insurance while you’re away
• You’ll have to add yourself back on the policy once you’re home for at least 30 days

Instead of changing your coverage, you may be able to remove yourself from a family car insurance policy temporarily. This option is worth exploring if you’re going away but others in your household will be driving the car.

This option can save you money if you’re a riskier driver than the others on your policy because taking yourself off reduces the odds of a crash. However, if it won’t save you money, there’s little benefit to removing yourself, and it’s probably more convenient to stay on the policy. If you’re not going away and continue to live with other drivers insured on the policy, this may not be an option. Many companies require all drivers listed at the same address to be included on a policy, or else be specifically “excluded.”

Removing yourself from the policy is not the same as being an excluded driver. If you’re simply not listed on the policy, you can still drive the car. Excluded drivers aren’t supposed to drive the car, and may be required to prove they have other insurance in order to be excluded.

There’s no single insurance option that works best for everyone. If you decide to keep your coverage,  a solid payment history should help you get competitive rates down the road.

Lacie Glover is a writer at NerdWallet. Email: lacie@nerdwallet.com. This article originally appeared on NerdWallet.