Don’t Save Money by Dropping Your Car Insurance
In every state in the US, it is a law to have the vehicle you drive covered by some type of insurance. Further, if you finance your car, your finance company may require you to obtain full coverage on your car as long as they are the lien holder.
Many people think they can skip needed insurance coverage to save a buck, especially in these days of a tight economy.
Dropping your car insurance to save money is never a good idea. Why? You may think you are saving some bucks but if you do get into an accident, there are things that will happen that you will have to deal with that may cost you more than if you kept your insurance coverage.
Let’s take a look at what might happen if you drop your car insurance and have an accident.
- If you financed your vehicle and have a lien holder like Bank of ABC, and you make monthly payments to them, chances are one of the conditions of the auto loan they gave you is that you obtained full coverage insurance in case you are in an accident.
If you drop your insurance, because they are a lien holder, good old Bank of ABC will get a notice in the mail telling them you dropped your car insurance and they will purchase a policy for you and include it in your monthly payment.
You can bet the insurance they buy will cost more than what you were originally paying!
- If you own your vehicle outright and drop your insurance and are involved in an accident, most likely the police will be notified. The very first thing they will ask you after, “Are you okay?” is “Can I see your proof of insurance?” If you don’t have any insurance, you will get a ticket that will take even more bucks out of your pocket.
In some states your driving license may even incur points for driving without insurance. Too many points and you could lose your license and have to pay legal fees to get it back.
- Whether you own your vehicle outright or finance it and drop your insurance and get into an accident and injure the other guy, you could be held responsible for medical bills, loss of work payments, and many other things that you can’t afford like the total cost to repair their vehicle as well as yours.
What if someone were to die in an accident caused by you and you dropped your insurance? This would involve many lawyers and court, and perhaps even jail time.
- If you drop your insurance and just run into a tree while backing out of your driveway and no one is hurt but the back end of your vehicle is falling off and you can’t open your trunk because the tree fell on it, how do you plan to pay for that damage?
Body and paint repairs are covered by your insurance if you get into an accident so again, this would be an out-of-pocket expense and not a very smart thing to do.
- If you go to buy a new car and don’t have a current policy on your old or trade-in vehicle, most car dealers will not let you drive the vehicle off of their lot until you obtain the required insurance.
- When you register your vehicle if you move to another state you must provide your local motor vehicle department proof of insurance or you can forget about that plate and registration papers.
Many people think they can save money by dropping their car insurance. You may save on that monthly premium if you own the vehicle outright and just pray you don’t get into an accident or no one hits you. Or, if you have a lien holder on your vehicle and drop it, you can bet they’ll be purchasing a high-priced policy for you and you will have to pay it or lose the vehicle.
Be smart when you think about car insurance. Dropping it does not save you money. An extended car warranty will save you money, though, so be sure to get your no obligation, free quote.
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Filed under: Safety
Great article. I recently made the mistake of dropping my motorcycle insurance because I didn’t ride it much and it was an extra $80 per month. About three weeks later I got a letter from the California DMV — in CA at least, they keep track of whether you have insurance or not. I was given a couple of weeks to get another insurance policy and send them proof, or they would suspend my vehicle registration. I’m still worried as to whether this whole thing is going to somehow hurt my credit because the bike was financed and my credit union has the lien.
Just another reason not to drop your insurance!
Dropping your insurance is always a bad idea. First of all because they will find out that you have no insurance and it could end like suspending your vehicle or something like that. Secondly it is because of accidents. They could happen when you don’t wait it at all. I think it is better to be insured and live without any worries. Btw thanks for the great article!
Yes. Insurance is important investment for cars.
Some people think that car insurance is a waste of money but it is really very essential that you have one.’,*