Can I pause my car insurance coverage?

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The holiday season means different things to different people. Globetrotters look forward to this time of the year to explore the world. From long-distance vacations to meeting families living abroad, this time of the year comes with an increase in travel expenses.  

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Given the rising cost of living, many Canadians are no doubt struggling with managing budgets and trying to cut down expenses wherever possible. If you’re busy budgeting for your next trip, a change to your car insurance policy might bring the savings you need.  

If you’re certain that you won’t be driving your vehicle for a few weeks or a few months, you can modify your car insurance policy to save some money. Removing the road coverage from the policy or cancelling it for a certain period of time are two options. However, there are certain considerations in both cases. 

Removing collision coverage from your car insurance policy 

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“A car insurance policy is designed to offer complete protection to the vehicle from unfortunate incidents like collisions, theft, and fire damage,” says Anne Marie Thomas, director of consumer and industry relations at the Insurance Bureau of Canada. 

“In case there is a pause in your driving, you can remove the road coverage from your policy and just include comprehensive coverage. This way your vehicle will still have protection from other risks like theft and fire damage. You can reach out to your insurance professional and ask for this change.” 

This policy change can be effective either for a few weeks or even a few months, depending on your needs. Altering your insurance policy to include only comprehensive coverage offers two benefits: first, your premium will decrease, and second, you still have an active insurance policy to protect your vehicle from certain perils.  

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Cancelling your car insurance policy 

On the flip side, if you decide to cancel your insurance policy altogether, it will result in a gap in your insurance coverage for that period. However, some people might consider this to be the more viable option, especially if you might be out of the country for longer periods.  

In this case, your insurance coverage will be suspended, and you will have to get a new policy on your return. But will the gap in coverage increase your premium?  

“Normally, an insurance company will not hold the gap against you if there is no negative reason behind it,” says Thomas. “If your coverage is suspended for reasons like failure to pay the premium or suspension of your driver’s licence, then yes, you might have to pay an increased premium when you get a new policy. But simply because you cancelled your policy as you were out of the country should not be a problem.”  

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Thomas adds that either of these insurance policy changes should be done only after having a detailed conversation with your broker or agent. “The professional will not know about your circumstances, and you might not be aware of all the discounts available,” she says. “So, it is advisable to have an in-depth discussion with your insurance specialist.”  

Other ways to save on auto insurance 

Looking for some other ways to save on your car insurance premium? Thomas has some points of advice:  

LowestRates.ca is a free and independent rate comparison website that allows Canadians to compare rates for various financial products, like auto and home insurance, mortgages, and credit cards.