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How to Cancel, Pause or Reduce Your Car Insurance During COVID-19

Last updated: January 27,2021
Originally Published: July 09,2020
by Rosen Valchev

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If your car is gathering dust in the garage it doesn’t make sense to pay a fortune for insurance coverage you don’t need

The COVID-19 pandemic brought the world to a standstill and left many people redundant. The pandemic definitely dried up savings and caused some serious financial struggles. Currently, it’s not an appropriate time to have unnecessary expenses.

And if your car is gathering dust in the garage it doesn’t make sense to pay a fortune for insurance coverage you don’t need. 

Still, you need to be extremely careful when you try to get rid of excessive car insurance costs. Especially when it comes to canceling your car insurance.

There might be better options. To begin with, it’s best to know what insurance companies and government institutions are doing about it.

How Insurance Companies and States Responded to COVID-19 Car Insurance

Insurance companies are aware that most people took a financial hit because of the COVID-19 pandemic. 

Your first step can be to call and ask your current insurer or agent about the coronavirus car insurance relief options you have. But you can easily explore these on your own. Actually, most insurance companies reacted adequately and in a timely manner.

The good news is there is a high chance you won’t incur any penalties if you recently failed to meet your monthly car insurance payment. Moreover, your policy most probably remained active. Insurers are giving a grace period and they don’t cancel insurance due to late payments as they will do in normal circumstances.

covid 19 insurance questions How to Cancel
Photo by Anna Shvets from Pexels

Also, the majority of insurers provided refunds or payment relief options for the months of April and May with some extending their coronavirus relief policy in June and even further. Insurers give discounts on premiums as well.

For example, Farmers has provided some clients with a 25% discount for April and a 15% discount for May. The company has also paused all policy cancelations through May 21st due to non-payment. The company has offered to extend customers’ payment due dates even further if they call them.

The government and states are not falling behind as well. Many states provided some great help to people struggling to pay for their car insurance. For example, the state of Alabama has insisted insurance companies provide discounts on premiums or refund customers because of reduced driving.

Some states like California went even further. California’s Insurance Commissioner commanded all insurance companies to refund clients for the months of March and April.

To see a long list of the measures insurance companies and different states are taking you can check this great car insurance COVID-19 article.

When you see what is the situation in our state, you can also get some car insurance quotes directly from Insurify.

So after we reviewed this important information let’s dive into the meat of the matter.

How to Cancel Your Car Insurance During COVID-19. Is it a Good Idea to Do That?

When you want to cancel or pause your car insurance there is one main thing you should be worried about. You don’t want to incur the so-called insurance lapse which essentially means a period of time through which you are not a holder of an insurance policy.

Why is that? Unfortunately, insurance companies consider people with insurance laps as riskier. In the insurance business, riskier means more expensive.

When you decide to sign up for insurance again you may find your average premium price is up by 20-30%. Not only with your former insurer but with every other insurance company.

So even if you save in the short term by canceling your car insurance policy you may end up paying much more in the long haul.

Needless to say, if your policy is canceled you can’t drive your car. Neither you, your family members or friends won’t be able to drive the car since it doesn’t have the required by law minimum coverage to be on the road.

Moreover, if you drop all your insurance your car won’t be protected against theft, vandalism and fire.

If you want to drop your expensive comprehensive car insurance and you don’t plan on driving your car, now it is a good time to explore third-party fire and theft (TPFT) insurance.

TPFT doesn’t cover you if you get in an accident while driving. But often it is cheaper than comprehensive insurance. 
Unfortunately, if you still have an active car loan you probably won’t be able to cancel your car insurance. Lenders require you to have car insurance in case of an accident. After all, the car is still not yours so the lending company has to protect its money and minimize the potential loss.

Also, bear in mind you need to meet some legal requirements to cancel your car insurance. Many states demand you submit an affidavit of-non use. Only after that, they allow you to cancel your car insurance and drop the minimum required by law coverage.

Apart from that if you still want to cancel your car insurance the process is pretty straightforward. You can just reach out and cancel your car insurance regardless of the insurance company you are signed up with.

Read More: How To Handle Your Coronavirus Flight Cancelation

How to Pause or Suspend your Car Insurance due to COVID-19

Sadly, not all insurance companies allow you to pause your car insurance. Despite that with the above-mentioned COVID-19 related measures, currently, insurers show more sympathy. 

To avoid coverage lapse which would result in higher future premiums instead of canceling your car insurance you can pause it for a certain period of time.

However, before suspending your car insurance for a few months, double-check with your insurer if this won’t be considered an insurance lapse. That is very important so you won’t get ripped off because you didn’t read the fine print.

The downsides of pausing your isnurance are similar to canceling it. Nobody can drive the car and it won’t be protected from fire, theft or vandalism.

Still, you typically won’t be able to suspend your policy if you have a car loan. You will also have to file an affidavit of no use again.
Nevertheless, it will make sense to pause your policy if you don’t drive your car and won’t incur an insurance lapse.

It’s a great time to save some money. Yet if your car is expensive, consider keeping comprehensive coverage or switching to third-party fire and theft insurance.

How to Reduce Your Car Insurance Coverage During Coronavirus

Pausing or canceling your car insurance may not be the right thing for you. Particularly if you are going to have an insurance lapse and you use your car to commute or you just want to be able to go on a road trip from time to time.

However, you might explore some other options to save on car insurance. For instance, if you are driving fewer miles than you used to before the pandemic hit, you can ask your insurance company for a mileage discount.

Also, there are other great ways to save on car insurance. You can check these amazing 15 tips and tricks to reduce your car insurance coverage. The best thing is you can use these tactics to save on car insurance not only during COVID-19.

By learning these tricks you can say goodbye to expensive car insurance forever (if you behave well on the road). But there is one more thing you can do. Ever wondered how some people are able to get rock bottom car insurance prices?

It is not as hard as you may think. You don’t have to spend days and weeks in research and tedious phone calls. You can compare multiple car insurance lenders online and get the best offer for you. Instead of you fighting for the best price make insurance providers fight for your business.


So What Should I do with my Car Insurance After the Coronavirus situation is Over?

Right now airlines are constantly changing and canceling flights. The volume of flights is on record lows as well. Most of us are going to prefer road trips in the summer vacation instead of flying abroad.

For that reason, be mindful and always have the right amount of car insurance coverage. Don’t cancel your policy if you intend to travel. Simply pause it if you can or find cheaper car insurance.

Still, if you decided the Coronavirus won’t get in the way of your dream summer vacation abroad you can ask us to step in and help.

We as travel experts have your back with our travel concierge. We offer unlimited credit card and travel assistance for one full year.

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