Vehicle storage insurance is a form of car insurance that some people buy to protect a car that’s not being driven. Rather, vehicle storage insurance refers to the act of minimizing an existing car insurance policy during the time your car is being stored. Keep reading to learn more about how vehicle storage insurance works in Canada.
What is vehicle storage insurance?
Vehicle storage insurance, or simply storage insurance, describes a type of reduced auto insurance policy that is designed to protect vehicles that are temporarily not being driven.
For instance, if you only drive your car during the summer and put it in storage over the winter, you might be able to reduce your third party liability car insurance so that you are mainly protected via your comprehensive car coverage, which is the main type of coverage that you need when storing your car.
That said, not all insurance companies will allow you to do this. In addition, if your car is leased or financed, then the terms of your lease agreement may stipulate that you need full auto insurance coverage for the duration of your lease.
How does vehicle storage insurance work?
Vehicle storage is essentially the minimum coverage requirements in your province, like liability car insurance and accident benefits coverage, as well as comprehensive coverage. Why? Due to the fact that comprehensive coverage is the only type of auto insurance that will protect a parked car.
When you add comprehensive coverage to your policy, your car will be protected against damage caused by insured perils, whether it’s parked in your driveway, on the side of the road, or even being stored in your garage. We dive deeper into comprehensive coverage below but the risks that it can safeguard your vehicle against include fire, theft, vandalism, hail, water, falling objects, and more.
Please note that many people assume damage to their parked vehicle is covered by home insurance. However, this isn’t typically the case. Unless you add a special rider or endorsement to your homeowner’s insurance policy, your property insurance plan is unlikely to cover you if your car is damaged while in storage. Thus, you will need to purchase an auto insurance policy that features comprehensive coverage.
Protect your car in storage with comprehensive coverage
If you want to protect your car while it’s being stored, whether it's being put in storage for a month, six months, or a whole year, the best way to do so is with comprehensive coverage. Comprehensive coverage is a type of car insurance in Toronto and throughout the rest of Canada that protects policyholders from non-collision-related incidents.
This is why it has earned the nickname, parked car insurance. Since a parked car is very similar to a car in storage, both parked and stored cars will benefit from this type of coverage.
Specifically, comprehensive coverage can pay to repair or replace your stored vehicle if it suffers damage due to an insured peril. Insurance perils vary between policies and insurance companies but may include theft, fire, vandalism, water damage, animal damage, falling or flying objects like tree branches, natural disasters, and weather-related events like windstorms and hailstorms.
Therefore, by adding comprehensive coverage to your auto insurance policy, your vehicle will be protected.
For example, if your car is stored in the garage at your home but a fire breaks out in your home and damages everything in the garage, including your car, your insurer will help pay to repair the damage. The same goes for if a thief broke into your garage in the middle of the night and stole your car. Without this type of coverage, you would be on the hook for the cost of repairing or replacing your vehicle out of pocket.
Please note that comprehensive coverage does not cover everything. For instance, if someone steals personal belongings that were left in your car when you put it in storage, comprehensive insurance would not cover you. It also wouldn’t cover you if your vehicle was stolen by someone in your own household. Further, any damage or losses suffered due to a collision would not be covered.
Filing a comprehensive coverage insurance claim for a car that was damaged in storage
If your policy features comprehensive coverage and your vehicle is damaged while stored, you will need to file an insurance claim with your provider. As soon as you notice the damage, contact your provider to let them know what happened.
From there, they will give you instructions on how to proceed with the claims process, including what forms to fill out, what evidence to provide, and how long you can expect the process to take from start to finish.
Gather as much evidence as you can, including photos and videos of the damage. Once your claim has been filed, an insurance adjuster will be tasked with investigating your case. They will review the evidence and information you provided on your claims form and may contact you to ask additional questions or set up a time to inspect your car in person.
Next, they will make a recommendation to your insurance company. The insurance company will make a final decision and will contact you with a status update on your claim. At that time, they will let you know if your claim was approved or rejected. If approved, they will tell you the payout amount you can expect to receive, as well as when and how you will receive it.
Cancelling car insurance vs. amending your policy when not using your vehicle
As a motorist in Canada, you may be wondering if it’s worth cancelling your car insurance policy while your car is in storage rather than simply modifying the coverage through vehicle storage insurance. The reality is that you may not have an option to cancel your policy completely.
Most insurance providers require policyholders to maintain some form of coverage on their cars. Therefore, by cancelling your policy, you could be opening yourself up to all sorts of risks. Even if your insurance company allows it, having no insurance on a stored vehicle is dangerous. At the end of the day, experts typically recommend amending your policy rather than cancelling it outright.
The risks of cancelling your car insurance policy while your vehicle is in storage
There are many risks that come with cancelling your car insurance plan temporarily while your vehicle is in storage. If you cancel your policy and have no coverage whatsoever, the following could occur:
You may violate your leasing or financing agreement
If your car is leased or financed, then you likely signed a legally binding agreement that featured all sorts of conditions and clauses. Although leasing and financing agreements vary, most include a clause that states the borrower must have a valid car insurance policy for the duration of the term.
Most of this time, the policyholder is required to have coverage beyond the minimum coverage requirements, such as collision coverage or comprehensive coverage. Thus, if you decide to cancel your policy outright because you haven't driven your car for a few months, you could be in violation of your contract. If the leasing company were to find out, they could cancel the agreement or repossess your car.
You may be charged cancellation fees
Some insurance companies charge cancellation fees if you wish to terminate your policy early. Thus, if you want to cancel your auto insurance policy before the term is set to expire, you may have to pay a hefty price tag.
Oftentimes, these fees may not even make the temporary cancellation worth it. To find out if your insurer charges termination or cancellation fees and how much they would cost, review the terms and conditions of your contract.
You would have to pay to repair your car if it was damaged while in storage
Another major risk of cancelling your car insurance policy instead of buying vehicle storage insurance is that your car could be damaged even while it’s not in use.
For example, if a thief steals it or a natural disaster damages it, without car insurance, you would have to pay to repair or replace it on your own.
How to buy vehicle storage insurance
Buying vehicle storage insurance is easier than you might think - especially if you have help from an insurance broker at BrokerLink. We outline the process of buying vehicle storage insurance below:
1. Contact your insurance broker
The first step is to contact an insurance broker. Let them know that you will be putting your vehicle in storage and ask them to find out whether your insurance company offers vehicle storage insurance.
2. Modify your existing coverage
If your insurance provider offers vehicle storage insurance, now is the time to modify your existing coverage. Most car insurance companies allow policyholders to amend their policies anytime during the term, although it’s typically easiest to do so when you are renewing car insurance.
That said if you decide that you want to change your policy partway through the term, such as if you want to buy vehicle storage insurance, you can likely do so. Remember that vehicle storage insurance in Canada usually consists of the minimum coverage requirements in your province, as well as comprehensive coverage.
If you’ve been driving a car, then your existing policy should already include the minimum coverage requirements. That said, if you purchased additional coverage, such as accident forgiveness, or higher coverage limits for mandatory coverage like third-party liability insurance, you may want to eliminate or reduce them.
In addition, if you don’t already have comprehensive coverage added to your policy, now is the time to add it. A reminder that comprehensive coverage is the only type of coverage that will protect your parked car from damage.
3. Contact your provider before you start driving again
If you decide to reduce your car insurance coverage while your car is in storage, make sure that you give your provider ample warning before you plan to drive again. Remember that auto insurance is a legal requirement everywhere in Canada. You are not permitted to drive without it. Thus, depending on how much you reduce your coverage, you may be unable to drive with your modified policy. If this is the case, you must update your insurance policy before driving again.
Learn more about vehicle storage insurance by contacting BrokerLink
If you’re ready to take the plunge and purchase vehicle storage insurance in Canada, contact BrokerLink. We are car insurance experts who will ensure you find quality coverage that complies with local laws. As auto insurance experts, we can also help with other tasks like expired car insurance renewal.
Plus, we aim to make car insurance as affordable as possible, which we do by shopping around on your behalf and unlocking discounts for you. For instance, we can give you tips on qualifying for low-mileage car insurance, which is significantly cheaper than regular car insurance. We can also answer questions about how insurance companies calculate premiums and how much car insurance costs per month in Ontario. Contact BrokerLink today to get started and request a free vehicle storage insurance quote.
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