Can You Put a Hold on Car Insurance?

Temporarily adjusting car insurance coverage, often referred to as placing a “hold,” involves suspending or significantly reducing the active policy on a vehicle that is not being regularly driven. This approach can offer financial relief by lowering premium costs during periods when full coverage is unnecessary. Individuals often explore this option for various reasons, such as long-term vehicle storage, extended periods of travel, or seasonal use of a specific vehicle. The primary goal is to maintain some level of protection for the vehicle while it is off the road, without incurring the expense of full, active coverage.

Understanding Car Insurance Holds

A car insurance “hold” does not mean a complete cancellation of the policy. Instead, it involves reducing coverage to a minimum level, such as comprehensive-only, or a full suspension of certain coverage types like liability and collision, where permitted by the insurer and state regulations. Full policy cancellation is a distinct action that can lead to a lapse in coverage history, potentially affecting future premiums. This specialized adjustment is considered for specific situations where the vehicle will remain stationary for an extended duration.

Common scenarios for considering a car insurance hold include storing a classic or seasonal vehicle. It is also suitable for individuals embarking on extended travel or military deployment, leaving their car unused at home. A temporary inability to drive due to medical reasons, with the car remaining off public roads, might warrant such a change. The vehicle must not be driven at all while the reduced coverage is in effect. Driving a vehicle with suspended liability coverage can lead to severe legal and financial consequences.

Initiating a Car Insurance Hold

The first step in initiating a car insurance hold is to contact your insurance provider. Policies regarding temporary coverage adjustments vary between insurers and depend on state regulations. When contacting your insurer, have essential information available, including your policy number, detailed vehicle information, the precise dates for which you intend the hold to be active, and the reason for the request. You might also be asked for the current mileage of the vehicle.

Inquire about your policy’s terms regarding holds, including any administrative fees, minimum duration requirements (some insurers require a minimum of 30 days for reduced coverage), or restrictions. Understanding these terms beforehand helps make an informed decision. The request itself is made over the phone, through an online portal, or in person, depending on your insurer’s available channels.

Once the request is made, obtain written confirmation from your insurer. This documentation should detail the start date of the hold, the revised coverage in effect, and the duration of the hold. In some cases, insurers or state motor vehicle departments may require proof that the vehicle will be stored off public roads and not driven during the hold period. If the vehicle is financed or leased, the lienholder will require continuous comprehensive and collision coverage, even when the car is not being driven. This requirement protects their financial interest in the asset.

Implications of a Car Insurance Hold

While a car insurance hold is active, the scope of coverage is altered. Liability and collision coverages, which protect against damages and injuries from driving, are suspended. The policy is reduced to comprehensive coverage, which protects the vehicle against non-driving related incidents such as theft, vandalism, fire, natural disasters, or damage from falling objects. The vehicle must remain off the road throughout this period, as driving without liability and collision coverage would leave you financially exposed and violate legal requirements.

State laws vary regarding continuous insurance requirements, even for stored vehicles. Some jurisdictions mandate maintaining at least minimum liability coverage, regardless of whether the vehicle is driven. In some states, to avoid penalties for a lapse in coverage, you might be required to surrender your license plates to the Department of Motor Vehicles (DMV) or file an affidavit of non-use. Driving without the required coverage is prohibited and can result in fines, license suspension, or vehicle impoundment.

Improperly handling a car insurance hold, or failing to comply with state requirements, can lead to a “lapse in coverage.” A lapse indicates a period when the vehicle was uninsured, which can negatively impact future insurance premiums. Insurers view a history of coverage lapses as an indicator of higher risk, resulting in increased rates when you seek to reinstate or purchase new coverage. A benefit of a car insurance hold is the adjustment of premiums, which results in a reduction in cost due to the decreased risk profile of a stored vehicle.

Reactivating Coverage and Alternative Approaches

When you are ready to resume driving your vehicle, contact your insurance provider to reinstate full coverage before the car is taken back on the road. You may need to provide updated information, such as confirming the vehicle’s intended use and its current mileage. Your insurer will outline any steps or payments required to reactivate your policy. Receive confirmation that full coverage has been reinstated and is active before driving the vehicle again.

If a full car insurance hold is not feasible or desired, alternative approaches can help reduce insurance costs. One option is to reduce certain coverage types, such as collision and comprehensive, or increase your deductibles. This approach is suitable if the car will still be driven occasionally but you wish to minimize costs.

Another alternative is non-owner car insurance. This type of policy provides liability coverage for individuals who frequently drive cars they do not own, such as borrowed or rented vehicles. It covers bodily injury and property damage you might cause to others while driving a non-owned vehicle. Usage-based insurance programs, also known as telematics, offer another way to save money. These programs use technology to monitor driving habits or mileage, adjusting premiums based on actual usage and safe driving behavior.