Just Lost Your Car? What To Do About Your Auto Insurance
Carrying auto insurance is state law now in practically every state. Yet, what happens when you lose your car in an accident, and you only had liability on it? Clearly, you will not get a check for your wrecked vehicle. What do you do now? Furthermore, if you do not have good enough credit to get another car right away, what do you do about your auto insurance? That is a monthly expense you do not need when you do not have a car and cannot get another right away. Here are your options.
Cancel the Insurance Completely
If you know for a fact that there is no way you can get a car in the next three months, you can cancel your auto insurance policy. It does not make sense to continue making insurance payments on a car that you no longer have, or a car that went to the salvage yard. It is not on the road, and should not be insured.
However, there are some things to keep in mind if you cancel your policy:
- If you lumped your auto insurance in with renter's boat, homeowner's, or other insurance product, you would have to cancel ALL of these to remove the auto insurance and start fresh without the auto part.
- If you cancel a separate auto policy, you may lose all the perks and benefits that came with your status as a loyal customer. That is quite the bummer because you would have none of that and would have to start over if you buy another policy for a new vehicle later.
- The prorated amount of any monthly premium that you have left for the month will be refunded to you, which is really the only upshot.
It is a very difficult decision here, and one you should not make lightly. Still, when you know that you cannot and will not get another car within three months, continuing to pay insurance on a non-existent vehicle is just not financially smart.
Keep the Policy and Keep Paying the Monthly Premiums
The flip side of the coin is just as difficult. If you keep the insurance policy, you have to keep making the monthly payments. If your premiums were high, or if you had coverage on the vehicle for more than one driver, that is a lot of money for a non-existent vehicle. (In fact, you could cancel the policy, gather that couple of hundred each month, and use it for a down payment on another car.) Of course, you would keep all of your customer loyalty perks, which often include accident forgiveness, quarterly discounts for safe driving, refunds for a clean driving record every six months to a year, etc. That way, when you do get a new vehicle, those perks still apply, plus you might be reimbursed if your premiums drop significantly.
Contact an agency, like Amco, for more help.