Auto insurance liability coverage is primarily for the protection of others in the event you cause injury in an accident.
It makes sense to question its need if the car’s never on the road. If you plan to take the car for a spin to test any modifications or repairs you made to the working parts of the car, keep liability coverage on your vehicle.
Classic or Antique
Consider a special policy if your car is a classic or antique. Most people take those types of vehicles out for a spin only a few days each year. If you call your agent, you’ll often find there’s special coverage for these types of vehicles. For the majority of the days, you have only comprehensive coverage. This covers damage from anything that’s not an accident. For a limited number of days, which you often designate, the auto has full coverage, which includes liability, comprehensive and collision.
Time Frame
Calculate how long you’ll keep your car in a state of renovation. If the process is a long one, consider dropping the coverage only if the car is a second or third vehicle. As the value of your car increases with each stage of renovation, you might want to insure it for comprehensive insurance only.
Considerations
Watch out if you drop insurance on your only automobile. If you have no insurance and try to secure a new policy, you may have to pay higher rates. Companies charge higher rates as a standard procedure on people who have a break in coverage. They theorize that the client continued to drive but without coverage. Since underwriting a policy is expensive, companies don’t want to insure someone who just seeks coverage to secure a license plate and then drops the policy.
Potential
Call your agent and explain your situation. She might recommend a policy created specifically for this type of scenario. If your car has substantial resale value, always carry at least comprehensive coverage on the vehicle. If your insurance company offers no alternative, consider dropping collision, keeping comprehensive coverage and use the state minimum for the liability.
Warning
If you have a loan on the car, you can’t drop all types of coverage. You must at least carry comprehensive and potentially collision. You need to check with the company that carries the loan. If you don’t protect its interest with insurance, the company may put their own policy coverage on the vehicle and charge you for it. The cost for this coverage is often abnormally high.
Discounts
Check to see if you’re receiving a multi-car discount because of coverage on the vehicle. Find out what the premium on your other vehicle is without the second-car discount and see whether there’s a savings if you keep the car insured and simply lower the coverage.