Thinking about cancelling or reducing car insurance during the COVID-19 crisis?
Posted By Darrigo & Diaz
Here are 5 things Tampa residents should consider before making that decision
Like many Floridians during this time, you may be experiencing serious financial strain as the coronavirus continues to impact the operation of businesses, schools and other public facilities across the state. While temporary closures and social distancing actions are necessary steps to help reduce spread and exposure, they will inevitably bring economic uncertainty for many people who are unable to work.
If you’ve lost your job or are worried about a layoff due to the coronavirus pandemic, now is the time to take a close look at your budget. An expense that may be at the top of your list to cut could be your car insurance. After all, with shelter in place mandates, you’re probably not driving a lot these days.
However, the decision to cancel or reduce your car insurance policy for the short-term should not be made lightly. There are many factors to consider, and some could have huge impacts on your financial future. It is extremely important to make an informed decision on the subject matter. Know the risks involved in canceling or reducing a car insurance policy before you make the call.
1. It’s the law
Florida state law requires you to carry a minimum amount of car insurance. Failure to do so can result in severe penalties that may include monetary fines and jail time.
If you temporarily cancel your policy, your insurance carrier is required by law to immediately notify the Department of Highway Safety and Motor Vehicles (DHSMV). The Florida DHSMV sends a notice of suspension by mail. You’re then given the opportunity to provide proof of new coverage before the date of suspension, which must prove that you had new insurance in place before the old policy expired.
Even if the period of the lapse was just one day, if you fail to provide the new valid proof of insurance that meets the Florida requirements when requested by law enforcements, such as at traffic stops or at the scene of an accident, your license, plates, and registration will be suspended for up to three years for your first offense.
2. Cancelling for the short term can raise your rates
For now, the coronavirus lockdown in Tampa is temporary, lasting a few weeks to a month. If you cancel your car insurance for a short period, you can actually be penalized by the State of Florida for going without car insurance for any length of time. This means that when you go to purchase car insurance again, you may be labeled as a high-risk driver and possibly charged a higher rate.
3. Being involved in an accident without insurance is serious and costly
Under the No-Fault Law, Florida vehicle owners are required to carry the minimum amounts of $10,000 for property damage liability (PDL) and $10,000 for personal injury protection (PIP). In case you are ever involved in an accident that causes any degree of bodily harm to others, your required coverage will also include Bodily Injury (BI) coverage of $10,000 per person and $20,000 per accident.
However, if you don’t have insurance, you will be held financially responsible for car damage, medical bills and other related costs.
4. You may end up owing money after canceling your policy
Insurance companies finance policies for a certain time period. If the terms of a policy are respected, then the monthly payments will cover the total cost of the policy by the end of its term.
The cost of insurance changes if the term is reduced to less than the original contract term. When the term is cut short, your monthly payments no longer meet the schedule. You may end up owing money – even after your policy is canceled – because of the penalty that has to be paid as well as any additional fees.
5. Removing Uninsured Motorist (UM) Coverage can cost you everything if involved in an accident
UM coverage generally only adds a few dollars to your monthly premiums, but the amount of coverage it gives you can be life-changing in the result of a tragic accident.
A lot of drivers on Florida’s roads do not have insurance. Most of these drivers are not carrying insurance because they are tight on cash . . . which means they probably won’t be able to pay for your accident-related expenses. If you want to reduce car insurance costs by removing UM coverage, you run the risk of becoming financially responsible in the unfortunate event you’re in an accident, even if it’s not your fault.
Learn more about UM coverage and reasons to keep it on our blog.
Injured in a Tampa car accident?
If you’ve been the victim of a car accident, you likely feel confused or overwhelmed by what to do next. Fortunately, our Tampa car accident attorneys are here to guide you through the entire process. Our car injury lawyers will investigate your accident, negotiate with the insurance companies on your behalf, and if necessary, fight for you in court. We will take care of all the legal work so you can focus on what is most important: your recovery.
The Tampa car accident lawyers at Darrigo & Diaz will be an advocate for you and fight for your best interests. Led by Board Certified Civil Trial Expert Nadine Diaz, our firm is a member of the Multi-Million Dollar Advocates Forum®. For over 20 years, we have helped thousands of Tampa residents and their families recover from serious car and truck accidents.
Call us at (813) 774-3341 to schedule a free case evaluation with our highly-experienced, highly-praised team.