Should son insure his stored car?
My son will be studying abroad for a year. Should he just drop his insurance? He won't be able to keep the car registered. We'll be keeping it behind our house while he is gone. Suggestions?
Your son has several options. He may be able to drop coverage altogether, or he could keep basic protection on the car, which might be cheaper in the long run. His choices:
- If the car is financed, he has to keep the vehicle insured with comprehensive and collision to satisfy his lender.
- If he owns the car outright, he can drop comprehensive and collision coverage at his discretion.
- He can drop liability coverage, but he may also need to turn in his plates to the state. A car that’s registered requires liability insurance in most states, and if he cancels coverage the state will be notified.
- He can ask his insurance company about keeping just comprehensive or storage coverage on the car, so it is protected against hail, theft, vandalism or any other hazards behind your house. Comprehensive is typically the cheapest element of any car insurance policy.
Dropping coverage altogether has a hidden cost: When your son returns to the United States, he will face higher rates because of the gap in his insurance coverage -- and he may find some insures reluctant to consider covering him at all.
For example, let’s look at the cost of liability-only coverage for a 24-year-old male in Akron, Ohio, with no tickets or accidents and a record of continuous coverage, driving a paid-off 2006 Dodge Charger R/T. We found premiums in Insurance.com’s quote comparison tool ranging from $742 to $921 a year. The same companies would charge $764 to $1,692 a year if he had a lapse in coverage.
A year of comprehensive-only coverage would cost from $200 to $300, depending on the company – not only easing the insurance process later on but keeping the car protected in the meantime.
Des Toups is a writer, editor and expert on insurance, cars and personal finance. He has written extensively about all three for national publications such as MSN and major newspapers such as the Seattle Times. He has been quoted about insurance issues in The New York Times, USA Today and Kiplinger's.
Follow him on Twitter @destoups