Should We Keep Insurance on a Car That Is Just Sitting?

Comprehensive Insurance

• A comprehensive insurance policy is ideal coverage for a vehicle you do not use often. Slightly more expensive than a state minimum liability policy, comprehensive covers damage caused from matters "other than collision," or damage that may occur from hitting a deer, fire, theft, vandalism or tree debris. In some states you can keep a lone comprehensive policy on a vehicle as long as you return the plates and you are not driving it. Check with your insurance company to determine the different policies available for a sitting or stored vehicle.
  
  

Vehicle Value

• Before canceling insurance on your vehicle, you should decide if the vehicle has value to you beyond its sales price. If you can sell it or plan to, you should protect against vehicle loss with an insurance policy until you do so. If your vehicle is worth money or you plan to give it to someone you know, keeping a policy in force protects it. Even though your car is just sitting, it still has the potential of loss from random events such as those covered in a comprehensive policy.
  
  

Getting Rid of the Vehicle

• Explore your options to get rid of the car. If you have no need for the vehicle at all, you can sell it, trade it in toward another vehicle purchase or even donate it. Selling it not only warrants you a profit, but allows you to save money because you can cancel your insurance policy. You can receive a tax deduction for donating or trading in your car. Many states deduct a trade value from a purchase price before applying applicable taxes.
  
  

State Requirements

• If you decide to cancel your insurance coverage, make sure you follow your state's requirements for taking the vehicle off of the road. Usually, this entails returning the plates to a motor vehicle office as soon as possible. Because insurance companies report coverage information for registered cars to the state's motor vehicle department, your registration may become expired, your license suspended or you may have to pay fines even if you were not driving the car. Check with your motor vehicle department's website or call in to find out state requirements.