Do I need to keep insurance or what is the minimum insurance needed to cover my garaged vehicle while I live overseas for at least 2 years.

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Do I need to keep insurance or what is the minimum insurance needed to cover my garaged vehicle while I live overseas for at least 2 years.

I am still making monthly payments on my car which is garaged in California while I am contracting overseas for at least 2 years. I am certain the car is not used but the insurance company threathens to add a hefty self imposed insurance on my payments if I don’t acquire insurance on my own. Do I need insurance if the vehicle is not used? Should I do, what is the minimum insurance can I purchase in my in this circumstance

Asked on April 16, 2009 under Insurance Law, California

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

I'll speculate that real issue is that under the agreement you entered into with the finance company you agreed to always maintain liability and collision coverage on the vehicle so long as there is any balance outstanding to them on the car.

If you fail to do maintain coverage the finance company can and will place "forced insurance" on the car -- and as forced insurance is normally only required for horrible risks that can not get private market insurance, the rates are outrageously high as befits the circumstances where the car owners are horrible risks and/or the firm buying the insurance really does not care how much it costs (and may even benefit is it runs the agency) as it passes the costs back to the owner.

It's the lender you have to placate. California will drastically reduce the cost of the registration if the car is in storage, and some insurance companies should be able to provide a minimal policy -- possibly fire and theft coverage only -- if the car is on blocks in a recognized storage facility.

The only ways out I see are:

  • paying off the car, in which case the finance company has no say.
  • selling the car now -- you can always buy a replacement in 2 years and save 2 years' depreciation on your car.
  • speaking to a human with decision making authority at the lender, explaining the situation and providing acceptable evidence the car will be in a recognized storage facility and not driven by you or your buddies, and getting a waiver so only fire and theft is needed.

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