So you are going on a trip. Maybe it is winter and you want to escape the numbing Canadian cold. Maybe you are trying to get as far away as you can. If you are, that probably means you are flying to your destination. The good news is you are sure to have some great adventures. The bad news? You now have a house full of unused utilities that you will still be paying for. On top of this list is probably car insurance.
It is no joke how expensive car insurance can be. This is why people are always looking for ways to make it cheaper. And if you do not have to pay for a month, you save some money, right? But can you actually suspend car insurance short term? Would insurance companies actually let you do it? And if they did, would it let you save money in the end? It turns out, it may do you more harm than good.
Can I Put My Car Insurance On Hold?
Canadian law states that all vehicles on the road must have insurance. This is why proof of insurance is a requirement when registering a new car. But what if the car will not be on the road for a while? Unfortunately pausing your coverage is not really an option. Insurers do not let clients suspend car insurance for a month. Just imagine if this was possible. It would be a nightmare tracking all the paused and resuming policies for companies. It would also be impossible to know which cars on the road have insurance or not.
If you really must suspend insurance, the only thing to do is cancel and then renew on your return. However, this might not save you any money. If you cancel before the term is up, you will have to pay penalties. In addition, a gap in car insurance is something insurers consider “high risk” behavior. Thus when you renew, you may get a higher premium. In the end, canceling insurance means you do not have to pay for a month. But between the fees and higher premium, you may end up paying more in the long term.
Do I Have To Have Insurance On a Car That I Don’t Drive?
If you have a car that you do not drive, you can opt not to have it insured. You just have to make sure that you never ever drive it. Driving an uninsured car in Canada is illegal and has costly penalties. In Ontario, the penalty for driving without insurance starts at $5000. If you will not be driving it for a long time, canceling your insurance may be a good idea. However, if the car will be in the garage for only a few weeks, then it might cost more to cancel. As previously mentioned, cancelation fees and possibly increased premiums are something to consider.
But there is hope. If you do not want to pay more for having a gap in insurance, you can just reduce coverage. This means you will still have insurance, but you will be paying much less. To do this, remove all the optional coverage from your policy. Just stick with the minimum requirements. For instance, do you need coverage for collision, additional accident benefits, and roadside assistance? Since you will not be driving, probably not. On the other hand, comprehensive insurance is now a must. It will protect your car from theft, vandalism, or fire while it is in the garage. By keeping the bare minimum coverage, you get to save on car insurance without creating a gap.
How Do You Cancel Your Car Insurance?
If you have decided that canceling your car insurance, even temporarily, is the way to go, the process to do so is easy. Insurance companies do not have a bond that requires you to complete your term. As such, you may cancel anytime. All you have to do is inform your broker. Make sure to get it in writing so that there is no confusion. If you cancel before the term ends, you will be charged with cancelation fees. Once it is all complete, however, your car will now be insurance-free. You will not have to think about paying premiums while on vacation.
Can You Take Insurance Off A Financed Car?
In most cases, car insurance cannot be canceled or suspended on financed cars. This is because lenders usually require proof of insurance in order to continue financing a vehicle. In some cases, the lending company is even listed on the policy. As such, if your car is financed, canceling insurance while you are on vacation may not be an option for you. It is best to talk to your financing company and clarify their requirements.
Temporarily suspending car insurance for short periods of time is not something car insurance companies in Canada allow. If you will not be using your car like if you are going on vacation, you cannot just pause your coverage then resume when you return. What you can do instead is to cancel your insurance completely, then purchase a new one once you are ready to use the car again. However, this may not be the most cost-effective solution. For one, you will have to pay fees if you cancel your insurance before the term is up. For another, having a gap in coverage will reflect badly on you. This may cause insurers to see you as high risk. As such, you may be quoted with higher premiums when you buy insurance again.
A more practical solution is to keep your coverage, but keep it to the bare minimum. Since you will not be driving, you do not need collision, third party liability, or other optional insurance. What you may need is comprehensive insurance. This protects your car if something happens to it while it is not on the road. This includes theft, vandalism, fire, earthquakes, and the like. By only getting useful coverage, you get to save money on premium while keeping your good insurance record.