7 Reasons You Shouldn’t Cancel Your Car Insurance, Or Take A Break

So, you’ve had your car insured for years now and never had to claim. Perhaps you work from home and aren’t driving as much as you used to. When you see that debit order go off each month, you start to wonder whether car insurance is worth the money. Should you cancel your car insurance, or take a car insurance break?

We recommend weighing up all the pros and cons first. As attractive as the short-term cost benefits might seem, reducing your insurance can have long-term ramifications for your household. After all, you want to be covered no matter the circumstances.

#1 Reason not to cancel car insurance – It’s illegal!

In Australia, it’s compulsory to have at least Compulsory Third Party (CTP) insurance. CTP insurance covers the costs of medical treatment and compensation for people injured in a car accident, regardless of who was at fault.

Here are some of the consequences of driving without CTP car insurance in Australia:

• You could be fined up to $3,300.
• Your car could be impounded.
• Your driver’s license could be suspended.
• You could be personally liable for the cost of any damage or injuries caused in an accident.

#2 Your bank may not allow it

Are you paying off a car loan with your bank? Or leasing your car? We recommend checking your contract (or calling your financier) before you resort to reducing or cancelling your insurance.

In most cases, your car is secured against the loan or lease, and you won’t own your car outright until you’ve paid out the full cost of the contract. And, as part of that contract, your financier (bank or leasing company) usually requires you to have adequate insurance for their asset.

Why? To protect it in case of damage or loss and you can’t pay out the loan.

By cancelling your insurance policy you’ll be in breach of your contract (and therefore in default). This might mean you become liable for extra fees and charges – or in some cases, payment of your car loan in full.

If this is you, it’s best to keep your insurance in force.

#3 Reason not to cancel car insurance – Accidents don’t take breaks

We get it, you’ve never had an accident and feel like the likelihood of having one is low. And yes, you might be a great driver, always alert and ultra-aware of road rules.

Regardless, accidents are often due to factors beyond our control, such as the weather, animals on the road, and distracted or reckless drivers. It doesn’t matter if you’re travelling close to home or further away – accidents happen!

So, if you think the probability of having an accident is almost non-existent because you’re not driving as much, think again. There are still very real risks out there.

Worst case scenario: you’re involved in an accident with another driver where you’re at fault. If this happens and you don’t have car insurance, you’ll not only be faced with the costs to repair/replace your own car, you’ll be liable for the cost of someone else’s repairs. Ouch. Don’t let that person be you.

#4 Theft is a problem in Australia

In Australia, a car is stolen about every 11 minutes. Crazy, right?

According to the National Motor Vehicle Theft Reduction Council the majority of cars are stolen from our homes – using our keys!

Many thieves are opportunistic, meaning that forgetting to lock your car or leaving your front door unlocked (even when you’re home) can make you an easy target. Some will try their best no matter how secure a car or property looks. Scary.

Think about the steps you can take to keep one of your biggest assets protected. Things like implementing simple daily actions to prevent car theft and having adequate insurance in case things go pear-shaped. Can you really afford to take a break in insurance and not be covered?

#5 Reason not to cancel car insurance – You can’t control the weather

If the past couple of years taught us anything about weather, it’s that extreme events are becoming more and more frequent – potentially increasing our risk of damage or loss.

The possibility of damage from fire, flash-flooding, hail, trees, branches, power lines and debris is very real. And there’s no predicting where you’ll be when a weather event happens or whether it will affect you even if your car is at home.

Being mindful of these events is important, as is preparing for the worst in case something happens to your car. Can you afford the risk of losing your invaluable mode of transport? Check out our article on Car Insurance Protection for Bad Weather for more info.

#6 Maintain your good rating (and cheaper premiums)

It goes without saying that it’s far less hassle to maintain your current insurance than to shop around for a new policy – but did you know it can also be cheaper?

There are many factors that go into an insurer determining insurance premiums. One of those is checking if there have been any gaps in your cover. If there are periods where you weren’t insured, you might be flagged as a higher risk and your premium might go up.

Not just that, but good driving records from previous policies sometimes don’t transfer from one policy to the next. You might need to prove yourself all over again and that takes time! This includes instances where you reduced your premium from comprehensive to third party insurance.

It can mean paying a higher premium than you’re used to. So, consider the impacts carefully when deciding whether to cancel your cover or take a break in insurance.

#7 You could lose important benefits

Many car insurance policies offer important benefits, such as roadside assistance and rental car coverage. If you take a break in your insurance, you could lose out.

Roadside assistance can be a lifesaver if you get a flat tire, run out of gas, or have another car problem on the road. Roadside assistance companies can send a tow truck to help you, or they can provide other services, such as jump-starting your car or delivering fuel.

Rental car coverage can help you pay for a rental car if your car is damaged or stolen. This can be very helpful if you need your car to get to work or school.

Other benefits that you could lose out on include:

• Windscreen cover – Excess free repair of your windscreen chips
• Emergency repair cover 
• Car Replacement A new car or payment up to the insured value if your car is stolen or written-off

Not all insurance providers offer the same benefits. The benefits listed above are offered by PD as part of our feature-rich, affordable comprehensive insurance plan.

Get help if you’re struggling

Sometimes you might feel like you don’t have a choice but to risk letting your insurance lapse or take a break in insurance. If this is you, we’re sorry to hear this. Australians are struggling with a cost of living crisis and many are foregoing basic necessities to make ends meet.

If you’re experiencing financial difficulty or struggling with your mental health you’re not alone. There’s no need to feel ashamed or embarrassed.

Rather than hurriedly cancelling any financial commitments that help protect your way of life, you should know you can explore other options. For example, speak to your bank about any repayments you can put on hold or discuss a rental reduction with your landlord.

For emergency financial relief in your area, check the DSS Grants Services Directory or contact these organisations that are equipped to help in this time of need:

• Salvation Army
• Anglicare
• National Debt Helpline
• Head to Health
• Lifeline
• Headspace
• Beyond Blue

After all, we want you to be covering all your bases if something were to go wrong.

Compare car insurance policies before you cancel

Not driving your car as much? You might decide to prepare it and store it for the time being. If you’re convinced that you can get a better deal on your car insurance, do your homework and check each policy to ensure you’re not under-insured.

If you’re shopping around, you might like to know that PD Insurance offers cost-effective, award-winning car insurance. Plus, if you need contents insurance or roadside assistance too, we’ve got you covered. Time to get a quote?