Car insurance question

sportsmom12September 18, 2004

For personal reasons, I am taking my 21 year old's car away for about a year. Because he has to work and go to college, I am considering letting him use "old betsy- our junker truck"

Here is the situation and questions

1. He has his own insurance which is very expensive(about 2500K a year with collision)

2. He is not on my insurance policy

Can I drop insurance on his car because we are taking it off the road- even though we owe a balance to the bank?

Since he isn't on mine what happens if he gets in an accident or am I better off just adding the junker to his and switchng the title to him. i would love to drop his insurance, and switch everything with the truck over to him. I am not going to see his car- just waiting until he matures more to let him have it back

Thanks

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steve_o

If there is a loan on the vehicle, you most likely will be required to carry insurance. You are letting the license tags lapse? I would call the car-loan people, explain the situation to them, and see what insurance you need to carry. I suspect you'll need at least some, to protect financial interest in case of falling limbs, light-fingered thieves, etc.

Your other question is best directed to your insurance agent. It does not sound like your son's use will be considered "occasional," so he likely won't fall under any such provision in your policy. I think you (and he) would be better off moving "Old Betsy" to his policy -- a lower replacement cost should lower his premiums (at least for a while). But I'm no insurance agent and I don't play one on TV. Call 'em. That's what they're there for. :-)

    Bookmark   September 19, 2004 at 7:29AM
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cowboyind

The holder of the car loan will probably require that full coverage insurance be maintained, whether anyone plans to drive the car or not. They are concerned not only with the possibility of damage to the car, but also liability that could go back to them if they permit a car that they own (since they have the title) to be potentially operated on the road without insurance. Many cars that aren't supposed to be driven are taken out "just once," and once is all it takes to get into an accident.

The best thing I can think of to do would be to park the car where you know where it is, and change the insurance on it to a "limited mileage" plan, if your company offers it. With State Farm, there can be a substantial discount if you are going to drive less than 7,500 miles a year.

One other possibility that would be an option if you have some other car that you do own free and clear would be to drop the insurance on that car (assuming you can park it in a garage where it would be unlikely to be stolen or damaged) and drive your son's car for the year that he won't be using it.

    Bookmark   September 20, 2004 at 12:59AM
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