What does suspending auto insurance mean?
When you suspend a car insurance policy, you freeze the insurance, so to speak. As of the date of the sale, the insurance is stopped. As soon as you have a car in your name again, you can reactivate the insurance. So you don't have to reapply for insurance. It's just a matter of putting the new car on the policy. So it offers convenience. After selling your car, the buyer will give you a release certificate. With this you can terminate or suspend the car insurance. Usually the preference will be to terminate the car insurance. You will get back the overpaid premium and when buying another car you will compare insurers anyway. Probably you will be better off with the newly purchased car in terms of conditions and premium with another insurer.
Why is terminating better than suspending?
You choose the best car insurance after a thorough comparison. Maybe insurer X is the most suitable option for your old car, but not for the new one. If you go for the highest quality at the lowest premium you are going to compare again for a new car as well. Because of this, suspending the car insurance doesn't make sense. For the new car, you still have to recalculate what you owe monthly or annually for the other car.
What happens to your claim-free years upon termination?
After termination, the insurer issues a policy showing the number of claim-free years accrued. When insuring another car, you can re-enter these years. Please note that the accumulated claim-free years only remain valid for three years. There are even insurers who use a shorter period. After this period, insurers strangely enough no longer take the claim-free years into account. As a result, you will lose your right to a discount.
When do you choose to suspend?
Motorists who have accumulated negative claim-free years in their current insurance policy are often better off suspending their car insurance rather than terminating it. Negative claim-free years are built up by claiming at-fault losses. If you do terminate your car insurance, you may run into the problem of not being able to take out new insurance. This is because many insurers are not open to insureds with a bad claims history. Policyholders with criminal records may also run into the same problem.
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