Car insurance while you’re gone

So you’d think that maintaining car insurance for the cars you leave in the US would be an easy thing.  It took me no less than seven phone calls in order to sort this out.

What you need to do depends on whether you’ll be selling your cars, storing them, or loaning them to friends.

Selling

If you plan on selling your car, most people say to leave a few weeks’ buffer.  I ended up selling our Honda Accord in two days using Craigslist.  Here are more tips on how to sell your car fast at a good price.  Remember to call your insurance company immediately after selling the vehicle so that you don’t keep paying to insure it.

Storing

If you’re going to store your car, insurance gets tricky.  Several insurance companies have storage plans, where you only pay comprehensive (e.g. in case your car is stolen, or your house collapses on it, etc).  However, requirements differ between companies.

I was told by one agent that I needed to take a photo of the odometer before and after storing it to prove that the car hadn’t moved.  Never mind how fishy that sounds, given that I could in theory just take two digital photos right now and submit one as the “after” photo.  Not that I’d do anything as shifty as that, nor do I recommend it.  I just mean that the rules make no sense, like the one where the TSA now requires you to take off your shoes because one guy tried to bomb a plane with his shoes, as if you’d take a page from that well-worn book.  Thank goodness no one has tried to bomb a plane with their underwear yet.

Storage plans end up cheaper by a wide margin since you’re only paying comprehensive coverage.  However, the companies I called all required that the vehicle be stored at your home.

When storing a car, you’ll need to do a variety of preparation, like emptying the gas tank, prepping the engine, etc.  The web has a variety of resources outlining what you’ll need to do.  The other route is to have a friend start up the car once a week or so for 10-15 minutes.  Although this isn’t as good for the car as driving it around, it at least keeps the engine cycling.  If you go this route, you should probably remind your friend that reversing the car doesn’t reverse the odometer, if your friend hasn’t seen Ferris Bueller’s Day Off.

Loaning

If you loan your car out to a friend, you may need to get them put on the title as the registered owner in order to get insurance.  The companies I called would not insure a friend for the long term (e.g. one year) if they weren’t listed as the registered owner of the car.

There’s a big difference between the registered owner and the legal owner on a title.  The legal owner is the one who really owns the car.  In cases where there’s a car loan, the legal owner is usually the bank.  The registered owner is the one actually driving the car, paying tab renewal fees, and getting insurance.  In the case where you’re loaning the car to a friend, you should remain the legal owner.  Your friend, as the registered owner, can get his own insurance on the car.

Maintaining yourself as the legal owner also helps you to avoid any sales and use taxes.  For instance, in Washington state, every time a car changes hands (legal owners), there’s a hefty 9% tax on the market value of the vehicle.  Changing just the registered owner costs you just a minor fee ($15) instead of having to pay the huge sales and use tax, and is perfectly legit as long as you plan to remain the legal owner of the vehicle.

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