Having auto insurance is mandated by law in almost all states in the U.S., which means that your car has at least the minimum coverage. However, have you ever wondered what would happen if you decide to sell your car and get an upgrade? Better yet, do you know what to do with your auto insurance if you are not planning to drive your own vehicle anymore and want to rely on rentals? These are some of the questions drivers have in mind when they are in the process of selling their vehicles. Since auto insurance terms differ from one insurer to another, you might not know what to do with your coverage once you give up the ownership of your car. There are a few scenarios that can happen in this case, so keep on reading to know more.
Cancel Your Insurance
Perhaps the easiest solution you can opt for when selling your car is to completely cancel your current auto insurance plan. Because auto insurance installments can be hefty, depending on the model of your car, it only makes sense that you’d want to save some money and invest in a new vehicle. However, you cannot simply decide to cancel your insurance out of the blue. If the renewal date of your coverage is still a few months away, you will probably have to pay a cancellation fee that will be deducted from the refund you are supposed to get. While such a fee does not amount to a considerable sum in most cases, you might still want to hold off canceling your coverage until it is time to renew it. Moreover, if you do not want to continue paying the installments, you should wait just before the renewal date and put your car on sale. This way, you will not have to pay any extra money out of your pocket.
Switch to Non-Owner Car Insurance
This scenario is a variation of the previous one. In this regard, a common question drivers ask is whether they will need insurance if they are not planning to buy another vehicle. To put it simply, the answer is yes; you need a special type of coverage known as “non-owner car insurance.” This type of coverage protects you from liability claims in case you want to depend on rentals to run errands or need to borrow a friend’s car, for example. Because you will be the one behind the wheel, not the insured, the car’s coverage might not protect you or cover all the damages that the vehicle may sustain in the event of an accident. To get this type of coverage, you can cancel your old policy and follow the guidelines explained in the previous point, and purchase non-owner car insurance instead.
Transfer the Insurance
Planning to purchase a new, sleek car? Well, don’t cancel your old insurance just yet! Most insurance providers allow you to switch your coverage over to your new vehicle. However, you may be required to pay a higher premium if you are buying a car that is more expensive than your old one. The great thing about this solution is that you do not have to cover the whole cost of a new policy, which will definitely help you save some money. To transfer the insurance, inform your insurer before you buy your new vehicle, and after you buy it, give them a call to notify them that you have completed your purchase. Some insurance providers may allow you to let the same insurance plan cover both your old and new cars simultaneously, provided that you sell the old vehicle within 20 days. Not all providers offer this deal, though, so make sure to ask beforehand.
Find a New Insurer
If you are not satisfied with the offers your current provider gives you, then it might be time to switch to another insurer. This scenario is only relevant as long as you plan on buying a new car and do not want to keep dealing with your old provider. In this case, you will have to cancel your current coverage, which might cost you a fee depending on your renewal date. Once this is done, you can start looking for a better insurance provider to keep your new investment covered.
Investing in auto insurance is the best means of saving money and keeping your vehicles safe. When selling your old car, you may choose to cancel your insurance permanently, transfer the coverage to a new car, or find another insurance provider altogether. If you are still looking for a buyer, though, it is recommended that you keep your insurance. This way, it will cover any damages in case a test drive goes south.