Car insurance during a long overseas trip?

May 31, 2009 10:25 AM

What can I do about my car insurance during a long overseas trip?

I might be going on a long (3+ month) overseas trip and I don't know what to do about my car insurance while gone.

When I contacted a customer service representative, they said lapses in coverage aren't looked upon favorably by insurance companies (especially in California?) and that my rates would probably go up if I stopped coverage and then restarted upon my return. The best she could do was drop it down to the state minimum (about $57/ month for me) while I'm gone.

Since they have a vested interest in continuing to get money from me, are there any other options? Some kind of planned non-operation that doesn't actually appear as a lapse in coverage? Switching to mega-cheap company?

I've been with them (Progressive) 11 years, overall have been a really happy customer with a good driving record, but I don't want to throw away money without checking for alternatives. I'm also kinda bugged "keep using us or else!" approach when I've been loyal for 11 years... but I guess that's the insurance game.

I won't be driving while overseas, if it matters.

posted by sharkfu to travel & transportation (10 comments total)

We JUST did this, but we didn't cancel it altogether. We just bumped it down to very basic insurance that doesn't cover anything but theft. We'll be gone for almost three months.

See what Progressive says about bare-bones coverage. State Farm didn't blink an eye.
posted by cooker girl at 10:30 AM on May 31

This is what your insurance agent is for, not a customer service rep. He/she may be able to do better.
posted by zachlipton at 10:34 AM on May 31

Oh, somehow I missed the state minimum thing. Sorry.

We decided to keep the bare coverage because what if someone does break in and steal the cars? $57 a month would be worth it to me for peace of mind.
posted by cooker girl at 10:40 AM on May 31

We have a situation where we need car insurance for just 2 months (live in NYC, car was in PDX, need sister to drive car from PDX to somewhere outside the ATL where it will be sitting for a year with no one driving it...complicated). Anyway, we talked to a lot of different agents until we finally found someone who gave us the scoop:

Most places say they only sell car insurance in 6 month bundles, but the fact is that car insurance isn't like making a payment on your credit card. With car insurance, every time you make a payment, you are covered for that month and that month only. So if you stop making payments, you stop being covered, and it does nothing to your credit rating.

He told us to just stop making payment when the car got to its destination. Voila! (if you would like to speak to this very personable and non-greedy insurance agent, mefi mail me)

Now, if you do lapse and your insurance company wants to bump your rates when you get back even after you've been a faithful customer for 11 years, I would raise cain and speak to a supervisor. That is just douchey. Then again, there is no prohibition against companies trying to squeeze every penny out of you that they can. I guess it's your call.
posted by whimsicalnymph at 11:03 AM on May 31

From Ms. Vegetable:

You should be able to suspend coverage on your vehicles - as in, get rid of your state-mandated liability coverages (Bodily Injury and Property Damage) - and only have Comprehensive coverage (this covers theft, hail damage, a tree falling on it, etc.) while you are gone.

Insurance companies are probably not going to offer this to you - because yes, they are out to make money.

Yes, your rates will go up if you don't have coverage while you are in the states and you need it.

I believe California is a "take all comers" state - which means that if you don't have coverage while you don't need it (ie you're overseas), they may not be able to hold this against you.

Call your state insurance department (yes, you have one, and part of their job is to answer questions like this) and ask:
1. If you stop coverage while you are overseas, what happens when you come back - will this hurt you? Or must insurance companies ignore your lack of insurance because you didn't need it?
2. If you can suspend liability coverages and only have Comprehensive coverage while you are overseas. Second, if you do this, what happens to your rates when you come back.
3. Ask for a comparison of rates for auto insurance companies in CA. This is just a good thing to review every once in a while, and it gives you a good idea of what companies will be cheaper for you, should you choose to switch companies.

Have fun abroad!
posted by a robot made out of meat at 11:06 AM on May 31

Your agent is correct that lapses in coverage are frowned upon by underwriters, so yeah, they're trying to make money off you, but no, she isn't lying.

The reason for this is that most people who let their coverage lapse do so for irresponsible reasons, e.g. failing to make payments. These sorts of reasons are associated with bad loss ratios, so insurance companies are well-advised to view this sort of thing in a negative light. But even just pulling the insurance on your car for "legitimate" reasons, i.e. going overseas for a number of months, isn't the kind of behavior insurance companies like to see, because it's basically choosing to engage in risky behavior, even if the risk is small, without proper coverage. That too suggests a tolerance for risk which makes underwriters' skin crawl.

This is just one seemingly non-driving-related behavior that underwriters consider when rating policies. Unemployed people are a lot more likely to be involved in losses, and big losses, than employed people. Some companies actually check your credit score, because people with good credit ratings are more likely to be responsible drivers, and underwriters have the numbers to prove it.* They'd love to charge elderly drivers more, as they're even greater risks than teenagers, but the AARP has been pretty effective at getting state insurance regulators to make this illegal.

Seriously though, at $57/month, you aren't really looking at saving all that much money by going elsewhere. You might find someone who will do it for $20. But over 3 months, that saves you about $120. Which really isn't that big of a deal for most people, and may well be worth not having to deal with the hassle of changing insurance companies and then changing back.

My recommendation would be to just bite the bullet and eat the cost. It's part of the price of demonstrating responsibility. You just need to plan it into your budget.

*I'm not saying whether or not this is a good thing, only that it's certainly a true thing.
posted by valkyryn at 12:13 PM on May 31

Oh, and one other thing: the insurance company's profit motive isn't the only thing in play here. Every year, insurance companies have to file their rate structures with state insurance commissioners, who evaluate those rates to see if they bring in adequate premium. These rates have to be justified by actuarial evidence, i.e. there needs to be a statistical reason given for accepting certain risks for certain premiums. If the premium a company intends to charge is too high, the commissioner may not do anything, as he assumes they won't be able to sell many policies that way. But if it's too low, he'll send it back to be fixed.

Why? Because insurance companies are regulated pretty heavily to ensure that they're able to cover their losses. This involves things like bringing in enough premium to cover losses, as well as arranging reinsurance treaties in the event that they have a bad year. So yeah, they are trying to make a buck here, but they're also trying to make sure that they don't get in trouble with the state for not bringing in sufficient premium to cover their exposure.
posted by valkyryn at 12:18 PM on May 31

It will probably be worth your while to drop coverage to the bare minimum, otherwise you'll lose your status (and subsequent discounts) as a long term subscriber. I have a car which has been disabled (bad trans awaiting a transplant) for a couple of years, but I've kept the coverage in force because if I drop coverage & add it back in when I'm ready to drive it again the premiums will be much higher. I'm in FL & pay ~$25 every six months so it's worth it keep the car tagged & insured while it's down for the count.
posted by torquemaniac at 1:49 PM on May 31

A lapse of coveage can impact your rate with future insurers, not just Progressive. Cut bqck your coverage for the duration and move on. It will be cheaper in the long run.

But... The car is going to be somewhere while you are away, right? Stuff happens. When you trim coverage, be sure not to trim coverage (probably the comprehensive) for anything that might happen to the car while you're away. E.g., if it's in a garage, you want coverage in case the garage burns.
posted by justcorbly at 2:17 PM on May 31

I have Geico and when I left the country for 11 months last year I called them up and they set me up on a extended vacation plan when I paid the full amount up front and then when I came back, they reimbursed me 75%. It meant that I had the bare minimum coverage on my car while I gone.
posted by k8t at 3:32 PM on May 31