Do I need to pay my insurance premium while my car is in the shop?

Why do you need car insurance while your car is in the shop?

You need car insurance while your car is in the shop because registration, lender, and coverage rules still apply. The repair shop will carry its own insurance, but that coverage does not replace your policy. Keeping insurance active prevents a lapseWhen your auto insurance coverage ends because you missed a payment or did not renew it on time. A lapse in auto insurance coverage may result in paying higher premiums for a new policy., protects the vehicle, and avoids lender or state penalties.

Car repair shops have some coverage in case they damage your car or there’s a fire that destroys it. They also have their own coverage for when employees are moving the car around as needed. That coverage doesn’t replace your personal insurance policy.

A lapse in insurance will be reported to the DMV and could result in your registration being revoked and other penalties. When you go to sign up for insurance again, that lapse could mean higher premiums.

If you have a loan or lease on the car, keeping it insured is part of your agreement. If you stop paying, you’ll default on the loan or lease agreement.

Can I cancel the insurance if my car can’t be repaired?

You can cancel insurance after the car is declared a total loss, the claimAn insurance claim is a request you make to your insurance company for coverage after your car is damaged or you have an accident. You can file a claim online, by phone, or in writing. is paid, and you no longer own the vehicle. If the car is not part of an insurance claim, keep coverage until you sell it, transfer ownership, surrender plates, or legally register it as non-operational.

If the car is not in the shop for a covered claim, you need to keep it insured until you can decide what to do with it. Your choices include:

Sell it to a salvage yard
Donate it to charity
Sell it to an individual for parts
Keep it as a non-operational vehicle, if your state allows it

With the first three, you can cancel the insurance as soon as ownership is transferred. With the last option, you’ll need to turn in your plates and, in some states, register the car as non-operational. Then, if the car is kept on private property and not driven, you can drop the insurance.

Learn more about your options for a totaled car.

FAQ: Insuring a car during repairs

What happens if you stop paying for car insurance?

If you stop paying your car insurance premium, your coverage will be canceled. Driving without insurance is illegal in most states. If you are caught driving without insurance, you may have to pay fines, have your license suspended or have your car impounded. Moreover, it leaves you responsible for expenses in the event of an accident.

Can I drop full coverage while my car is in the shop?

No, unless you own the car outright and don’t have a loan or lease. If it’s financed or leased, you must keep full coverage. If it’s not being driven, ask your insurer whether you can reduce your coverage.