Heading off to college, embarking on a world tour, putting your car into winter storage or spending a few months at a second home? If you leave your car at home, unused, consider tweaking your car insurance coverage. One of these options could save you hundreds of dollars a year.
Don’t, however, just cancel your insurance without checking your state’s laws and your insurer’s fine print — or you could lose your license, rack up hefty fines, and your next insurance policy might be harder to get and more costly. Here are six ways you can save smart.
1. Planned non-operation (PNO)
Some states allow drivers to designate a car as “planned non-operational,” or PNO, if it won’t be driven for a period of time, such as three to six months or longer. You don’t need to register or insure a PNO car; you just need to complete a Certificate of Non-operation and pay to file it. This is the least expensive way to cut auto-related costs — by avoiding both registration and insurance expenses. Be aware that a PNO-designated car cannot ever be driven. In fact, it can’t even be towed or parked on public streets, and in some states (such as California), drivers must turn in the vehicle’s license plates.
The PNO certification is most appropriate for those who store cars for long periods without driving them. PNO is not a great solution for students or anyone who might need their cars at some point during the year; if you need car insurance for young drivers, you may want to explore other options. But, if you travel extensively, own more than one home (and keep vehicles at each location), or go away to college, other strategies let you drive occasionally while still saving money.
2. Affidavit of non-use
In some states, you may be able to cancel your auto liability but maintain your registration by filing an Affidavit of Non-Use (ANU). California, for example, requires that you complete a PNO for your vehicle’s registration, then file an ANU to inform the DMV that you have or will be canceling your auto liability insurance and will not be driving the car. In order to begin driving again, you’ll have to secure the legally-required minimum coverage and notify the DMV.
New Mexico’s motor vehicle division stipulates that if your vehicle is not being driven, you must submit a completed and signed ANU form annually. Your registration will be reflected as “unknown” for insurance purposes, but you should not incur a penalty as long as you don’t drive on New Mexico roads.
3. Low mileage and pay as you drive discounts
If you will be driving your car periodically during the year, but not putting on a lot of mileage, get auto insurance quotes for “pay as you drive” (PAYD) low mileage policies. What constitutes “low mileage” driving? That depends on the auto insurance company, but typically ranges between 2,500 and 10,000 miles per year. Those with PAYD insurance plans who drive 2,500 miles or fewer can save as much as 54 percent on their annual premiums, according to the Department of Transportation.
Understand that PAYD plans usually require your mileage and driving to be monitored. That means allowing some sort of tracking device to be installed on your car or recording your mileage through systems, such as On-Star. Yes, Big Brother is watching you drive, but Big Brother is also giving you cheap car insurance.
4. Classic car insurance
If your car is 25 or more years old and gets only occasional use, you may be able to get a less expensive “classic car” policy. Insurers can charge less because classics are generally driven less and cared for more. Ordinarily, to get a classic car policy, your vehicle must be garaged and not used as your primary mode of transportation. These policies can save up to 45 percent over insurance for daily drivers.
Classic car policies actually may limit the number of miles you can drive (and specify that the car be garaged when not in use), so be sure to check the fine print when signing up.
5. Stored car insurance
It’s smart to retain some amount of coverage for your car, even if you aren’t driving it. Comprehensive insurance coverage protects you from losses not related to driving — like theft or vandalism. Because vehicles are much less likely to be damaged in your garage than on the road, parked or stored car insurance is considerably less expensive than full coverage (meaning both collision and comprehensive coverage).
Remember if you’re storing a vehicle that is financed, your financing company will not allow you to drop down to only comprehensive. It will likely require you to carry both collision and comprehensive on your stored vehicle.
6. Occasional driver discount
For college students who leave their car with their parents, it may pay to register it under the parents’ names and add it to their policy as a low-mileage vehicle. For this to happen, your parents would need to be listed on the vehicle’s title.
If the insurance policy is in your parents’ names and you are only driving the car when you come home for breaks, you should be listed on the policy as an “occasional” driver, which accesses your parents’ (probably) lower rate while protecting you. Do not reward your parents’ generosity by letting your friends drive your car.
Mistakes to avoid
Never let your coverage lapse without first getting the OK from your state DMV. Students have discovered that after several years of not insuring or registering their cars, they owed years of retroactive registration fees and hundreds of dollars in filing penalties.
Don’t abandon your insurance if your car is financed. While the state might not care if you drop insurance coverage on a parked car, your auto lender will care a great deal. Once auto insurance companies notify lenders that borrowers are no longer carrying full coverage, lenders can slap on the most expensive coverage. Force-placed insurance, also known as creditor-placed or lender-placed insurance, is purchased by your auto lender and the premiums are added to your monthly payment. Your lender is not running around looking for the cheapest auto insurance rates on your behalf. You. Will. Pay. Through. The. Nose.
Do it right, however, and you could save heaps. Of course, you are smart enough to stay on top of your auto insurance needs. That’s why you’re in college in the first place, right?