Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Oct 14, 2021

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With the price of gas remaining steady at over $3.00 per gallon just about everywhere in the nation, more Americans are opting to either sell the extra family car or simply park it and rely on alternative travel options.

There are also those of us who simply own more cars than we can reasonably use at one time.

Whatever your personal circumstance, you may be leaving money on the table if you’re paying for full coverage auto insurance on a car you don’t plan on using for an extended period of time.

If you’re thinking about saving on car insurance by not planning to drive your car, you might want to have a car storage insurance policy which is comprehensive-only policy. This coverage would cover anything that could happen to your vehicle while it’s parked or stored.

What auto insurance coverage can I drop?

A quick review of liability insurance and physical damage coverage on a standard personal auto policy will demonstrate that some of this insurance coverage is simply not necessary for a car in storage. So what exactly what can you drop?

Liability Coverage– this includes both bodily injury and property damage liability, usually purchased in split limits, designed to protect you against damages resulting from an accident…while driving your car. If the car’s not being driven, it’s impossible to cause an accident in which you injure someone or damage their property.

Collision Coverage – pay close attention to this one. Collision coverage is one part of physical damage coverage on an auto insurance policy. Unlike liability coverage (discussed above), physical damage coverage is designed to pay for vehicle damage…caused by colliding with another car or other object. Again, if the car is not being driven, you’re not going to be colliding with anything.

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What do I need to keep?

As discussed above, collision is only one part of the physical damage coverage available on a personal auto insurance policy. And it’s not necessary if your car is not on the road.

In fact, there is no such thing as ‘vehicle storage insurance’ or ‘parked car insurance’. This is a kind of slang term used to describe the coverage people need when their car is stored or parked.

What you DO need, however, is comprehensive coverage, which is the other component of physical damage coverage.

Comprehensive coverage, also known as “other-than-collision” coverage, protects your car against any damage that may happen to it while it’s parked. After all, there are several ways your car can get damaged even though it’s not moving.

However, some states will not allow you to have comprehensive-only coverage even if you’re not using your car. The same applies to lenders who have a lien against their vehicle (auto loan). You will have to pay the cost of your deductible if you have comprehensive insurance and your parked or stored vehicle is damaged due to events not related to a collision.

Here are some examples of when comprehensive coverage would be triggered by an insurance claim:

House Fire – This one relates to a common insurance myth. If a house fire damages your car while it’s parked in your garage, your home insurance WILL NOT pay for the damage.

Hail Damage – No garage? Then your car sits outside subject to whatever Mother Nature throws your way. Without comprehensive coverage, you’re paying the bill here.

Flood – Ask anybody who lives near the beach in a hurricane-prone area of the U.S. Flood waters damage thousands of cars per year. None of which is covered by collision insurance.

Theft – No matter where you live or where your car is stored, if someone steals it, it’s not getting replaced without comprehensive coverage.

Damage By Animals – This one may be a stretch (and is certainly a common insurance myth), but if your car is damaged by an animal, even if the animal technically “collides” with your stored (or moving) car, it is covered by comprehensive insurance…not collision.  See deer insurance.

Keep in mind that some insurers may require you to turn in your license plates (or the equivalent in your state) to the DMV to qualify for this type of restricted coverage.  This essentially proves to them the vehicle is not being used.

Additionally, don’t expect a “car storage discount,” as insurers don’t favor this setup because most people would do it to save money…then drive the car anyway.

If you’re not sure where you stand, or know you’re currently paying for full coverage, call your insurer and/or shop around for insurance quotes online to ensure you get the best deal going forward.

It’s important not to cancel coverage for your stored car because you will create a gap in coverage which can cause your insurance company to put you in the high-risk category of drivers. As a result, you may pay higher insurance premiums when reinstating your policy. You will also have no protection against accidents and you will be completely responsible for any damages caused tp your parked vehicle.

(photo: Damors)