Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: May 2, 2022

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Here's what you need to know...

  • Canceling your insurance is very risky
  • You cannot file claims while the vehicle is in use
  • Some states will only require liability insurance

When you purchase car insurance, you have the right to cancel your policy at any time as long as you are one of the named insureds.

It is common for policyholders to shop the market, find more affordable plans, and then submit their car insurance cancellation when they have found the best value.

While the most common reason that policyholders cancel their personal insurance is to switch carriers, there are other reasons why a cancellation may be requested.

For example, if you have stopped driving your vehicle, you cannot just automatically allow your insurance to lapse.

You may no longer have that risk of getting into an accident, but you do still have the obligation to comply with mandatory insurance laws that dictate the minimum amount of coverage that you can carry.

This is why you really need to understand your options when you have a vehicle you do not plan on driving or that is going to be inoperable for an extended period of time.

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Why You Cannot Cancel Insurance on a Registered Vehicle

It might sound reasonable that you can cancel insurance on a vehicle that you know for a fact will not be driven throughout the term of your policy.

After all, if a car does not start or you no longer have a license, you are not going to be at risk of filing a claim for third-party property damage or bodily injury losses.

Since all states have their own requirements regarding insurance, you need to follow the rules for as long as you are the owner of the car.

You may not file any claims that are associated with vehicles when they are being driven, but you are still obligated to follow the vehicle code like every other resident in the state that owns a car with an active registration.

If there is no insurance on a car, the person who the car is registered to will be fined.

This is a major reason why the insurance should be in the same name as the name of the registered owner.

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Do you need an active vehicle registration?

In most states, your vehicle registration will last for a term of 1 year. After the 12-month period, you should receive a registration renewal notice.

When the registration is up for renewal, you must pay registration fees for the new registration card and license plate sticker to be sent. Your vehicle may need to pass a smog check before you can renew.

If you do not need a smog inspection, filing by mail should be an option. Send the vehicle registration renewal notice and fees to the DMV. Check your local DMV website for information about acceptable forms of payment.

If you do not pay your renewal fees before the vehicle registration expiration date, you will incur late penalties.

As long as your registration is active, the Department of Motor Vehicles is under the impression that the vehicle is being used.

Since the car can legally be driven, it must legally be covered by a personal auto insurance policy. Most states will only require you to have liability insurance.

Planned Non-operational Vehicle Status

When your registration is up for renewal, your notice will give you the option to register your car as non-operational.

In insurance terms, a non-operational registration is called a non-op.

By selecting Planned Non-Operation (PNO) status, you will pay a lower rate but cannot legally drive the vehicle.

You also cannot store, tow, or park the car on any public roads or highways if it has non-op status.

Before the car can be driven or stored in a public area, it must be re-registered.

Since the car cannot be driven and the Department of Motor Vehicles is aware that the owner has no intentions of driving the car, the owner does not have to maintain liability insurance.

This is one circumstance where you can cancel your car insurance on a parked car without having to worry about any repercussions.

Just be sure you find out when you must file the vehicle as non-op before you plan for a cancellation.

Many states will only give you up to 90 days following your renewal date to notify the DMV of the new status.

How will the state know you do not have insurance?

You might be tempted to take the chance and cancel your coverage early even when you cannot change the status of your registration.

No matter how tempting it might be, you should avoid doing this at all costs.

It does not take being cited for no insurance just to get caught.

Now that most states have electronic verification systems in place, any vehicle owner with a registered car that allows their insurance to lapse will be caught and fined.

This reporting system makes it mandatory for licensed insurers to tell the DMV when there is any type of policy lapse.

As long as the car has a registration, the owner can be fined.

If you ever decide that you want to operate the vehicle again, you will be left paying steep fines.

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What are your options to avoid fines and fees?

The most effective way to avoid being penalized for failing to carry insurance is to change the status of your car to Planned Non-Operational.

By changing the status, you can still easily re-register the car when it is repaired or when you return home from out of the country.

If you prefer to keep your insurance, there is always the option to lower the coverage to only those required by law, so the premiums will go down.

If you are outside of the window to change the status, you can always turn your plates in entirely and cancel the registration.

By doing this, you will have to go through all of the steps of registering the car as if it were new when you plan on operating it.

If your car holds any value, be sure to keep comprehensive coverage so that you will have the ability to file a claim for incidents that can happen while it is parked.

If you do not have insurance on your stationary vehicle that you plan to drive in the near future, it is time to start comparing rates.

You can easily do this via the Internet by using a convenient online quoting tool.

Start comparing car insurance rates now! Enter your zip code below to get started now!