Do I Need Insurance If I Don’t Drive My Car?

Having a car that you don’t drive can seem like an unnecessary expense, especially when it comes to paying for auto insurance. While it may be tempting to cancel your policy to save some money, doing so can end up costing you more in the long run. In most states, you are legally required to maintain at least basic liability coverage even if your car is sitting unused. Read on to learn more about the insurance requirements for stored vehicles, how to minimize costs, and steps to take if you decide not to keep your policy active.

Are You Legally Required to Insure a Car That Isn’t Driven?

In general yes. Nearly every state requires at least liability insurance for all registered vehicles, regardless of whether they are driven regularly or not. Liability coverage protects you in case an accident occurs involving your car when it is parked on a public road or being operated by someone else with your permission.

Even if your unused car is stored on private property like a garage you could still be held responsible for injuries or property damage it causes. For example if it rolls out of the garage and hits a neighbor’s fence or injuries a passerby. That’s why most states require you to maintain a minimum level of liability coverage at all times during the vehicle’s registration period.

The only exceptions are if you officially declare the car as non-operational or turn in the license plates. We’ll discuss how to do that properly later in this article.

Why Keep at Least Liability Insurance on a Stored Vehicle?

Aside from following state legal requirements, there are a few key reasons why it’s advisable to keep liability insurance on a car you aren’t driving:

• Protects your assets – If an at-fault accident occurs involving your stored car, liability coverage helps pay for injury claims and property damage you may be responsible for. This protects your personal assets like savings and home equity.

• Avoids lapse in coverage penalties – If you cancel your policy and later reinstate it, most states charge fees and higher rates for the coverage gap. Maintaining continuous coverage avoids these costly penalties.

• Prevents registration suspension – Letting your insurance lapse can lead to fines, license/registration suspension, and having to pay fees to reinstate your registration. Keeping coverage prevents these hassles.

• Allows occasional use – Liability coverage gives you flexibility to drive the car infrequently for maintenance, errands, etc. This is easier than having to reinstate the policy each time.

• Often required by lenders – If you still have an auto loan or lease, the lienholder usually requires you to keep comprehensive and collision too.

How Much Does Insurance Cost for a Car You Don’t Drive?

The cost to insure a stored vehicle depends on several factors:

• State minimum requirements – Monthly premiums typically start around $50-$150 for basic liability coverage mandated by your state. Rates vary by state minimums.

• Your previous driving history – Drivers with accidents and tickets on record pay more for liability coverage than those with a clean driving history.

• Vehicle attributes – Premiums are partly based on the car’s year, make, model, and value. Sports cars and luxury vehicles often cost more to insure than basic economy cars, for example.

• Coverage limits – Going beyond the minimum liability requirements provides more protection but also increases the premiums.

• Usage and mileage – Inform your insurer the car won’t be driven. Low annual mileage earns a rate discount.

• Location – Insurance costs are partially based on the zip code where the vehicle is stored and registered.

• Discounts – Bundling with homeowners or renters insurance and insuring multiple cars may reduce the rate. Ask your insurer what discounts apply.

The exact premium will depend on your specific circumstances, but you can generally expect to pay $300-$800 annually for basic liability coverage on a car not in use. Going beyond state minimums costs more but provides better protection.

How to Minimize Insurance Costs on an Unused Vehicle

Aside from shopping your coverage around, here are some other ways to reduce insurance expenses on a car in storage:

• Inform your insurer and formally list annual mileage as less than 5,000 or “pleasure use only”. This earns a low mileage discount.

• Increase liability limits only up to state minimums rather than carrying extra coverage.

• Drop comprehensive and collision coverage if you own the vehicle outright with no lien. This cuts about 40-50% off premiums.

• See if a usage-based policy is available where you only pay for actual miles driven.

• Bundle insurance policies together for multi-policy discounts.

• Enroll in any defensive driver, good student, or low mileage programs offered by your insurer.

• Pay premiums upfront or in full to avoid monthly fees. An annual policy may be cheapest overall.

Steps to Legally Cancel a Policy on an Unused Vehicle

Since insurance is required in most states for registered vehicles, you can’t simply cancel a policy without taking proper steps. Here is the correct process:

• Contact your state DMV to formally change the car’s status to “non-operational” if that designation exists. This temporarily suspends registration requirements.

• Return the license plates to the DMV so they can be taken out of use until you reinstate registration. Don’t keep inactive plates on the vehicle.

• Cancel the active auto insurance policy once you’ve completed the previous steps. Removing plates first prevents penalties.

• Keep the vehicle on private property while non-operational. You cannot park it on public roads without current registration and insurance.

• Document the steps you took in case evidence is later required. Taking photos showing removal of plates is a good idea.

When you eventually want to drive the car again, you’ll need to contact the DMV to re-register it, get new plates, and purchase an insurance policy before it can be legally operated on public roads.

Some states impose time limits on how long a car can stay non-operational before requirements kick back in. Check your local laws.

The Bottom Line

Keeping auto insurance, even just basic liability, is usually required by law for any registered vehicle regardless of driving frequency. The premiums are generally very affordable compared to potential claims costs if an uninsured parked car got into an at-fault accident. Maintaining continuous coverage also avoids administrative hassles and penalties associated with cancelling insurance and later reinstating a policy.

Review your state’s minimum requirements and take advantage of discounts to minimize the insurance costs on a car you don’t drive often. But unless you formally declare the vehicle as non-operational, it’s wise to keep liability coverage in force. This protects your assets and gives you flexibility to occasionally use the vehicle when needed.