Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jul 14, 2021

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In a nutshell...

  • You must buy auto insurance on all operable vehicles as long as they are registered
  • If you’re only using a car occasionally, it doesn’t negate the auto insurance requirement
  • Cars that are rarely operated can be rated as extra vehicles as long as there are other cars in the home
  • One way to save on premiums is to assign a vehicle that’s rarely driven a low-mileage, pleasure usage rating
  • Some companies offer special usage-based insurance rates but you must install a device in your vehicle

Cars can stay parked in a garage or a driveway for months on end. If the owner of the car has other vehicles to drive or they drive certain models seasonally, they might let their car sit for weeks or months on end.

No matter how long the car is sitting, as long as the vehicle is registered, it needs to be insured.

The last thing you want to do is spend hundreds of dollars a month insuring a car that’s only used occasionally. You can’t erase the insurance bill altogether but there are ways to keep your premiums down. Your number one priority should be to comply with state laws.

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After you’ve done this, you can focus on pricing and coverage level. Here’s what you need to know about occasional use auto insurance:

When a Car is Registered It Must Be Insured

You must register a vehicle to drive it and park it on public highways. If you don’t register a car in your name and pay the tag fees, you could be pulled over, cited, and your car could be towed. Failing to comply with the law could be the end of owning a car.

With the registration requirement comes an insurance requirement. As long as you’re driving a car that fits the definition of a car that has to be titled and registered, you’re going to have to buy insurance on the car too.

The only way to get around buying insurance is to live in a state where it’s not mandatory.

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The Auto Insurance Requirements Will Vary By State

There are several different types of Property and Casualty Insurance sold in the private marketplace. The only one that you legally must buy when you own property that’s titled in your name is auto insurance.

The mandatory coverage and limit requirements will vary by state. You’ll have to look these limits up before you buy any type of policy.

How much insurance you need on a vehicle that’s used occasionally isn’t any different from the amount of insurance that you need on a car you drive often. In your mind, owning a car for occasional use is a lot less risky, but not in the eyes of the law.

It takes just one trip to get into a crash and that’s why you have to satisfy the same requirements no matter how much you drive your vehicle.

Should you take low limits of liability on occasional use vehicles?

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One way to keep your insurance premiums down on an occasional use vehicle is to elect to carry low limits of liability.

There’s no law saying you have to take more than the bare minimums on your car, but you could leave your enter financial future at risk if you decide to take low limits just to save.

Occasional use vehicles are still on the road. In the blink of an eye, you could drive your car around the block just to maintain the engine and then crash into another vehicle or a pedestrian.

You never know when you’re going to have a loss, so it’s best to keep sufficient limits to protect your finances and assets.

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Is it smart to remove physical damage coverage from an occasional use car?

Liability limits are very important because you can’t control when someone is going to file a claim against you. You do, however, have control over claims that you would file on your own.

One big way to save money would be to reject coverage on your car that’s not extremely important to you. Comprehensive and collision cost an average of $435 per year.

Physical damage coverage is only required by lenders when your car is financed or leased. If it’s paid off and it doesn’t have a high retained value, carrying comprehensive and collision on the car doesn’t really make a great deal of sense.

You’ll have to look at the car’s value, but if it’s an extra car, replacing it might not be too important.

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How is usage used to determine how much you’ll pay?

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Coverage does dictate how much you’ll pay for insurance but it’s not the only thing that does. There are so many other factors that insurance companies look at when calculating your rates.

You might not be able to activate and deactivate coverage every other week when you’re driving your extra car but you can take advantage of some of the factors.

One of the best factors that will help you keep your premiums down is vehicle usage. Insurance agents will ask you how often you drive and what your driving habits are. This is an important question because driving habits can affect risk.

You may drive your car for the following reasons:

  • Pleasure
  • Commute
  • Business

The lowest premiums are assigned to pleasure drivers. As long as you’re not driving to and from work and school, you can receive that pleasure rating. If you drive the car to work occasionally but you have another dedicated commuter car, that is acceptable.

Don’t lie about occasional use if you drive the car regularly or it could affect your coverage.

How is annual mileage used?

The average person will drive their car about 12,000 miles per year.

Your commute and how often you go on road trips are factors that can ramp up your mileage each year. Having extra cars can also split mileage between vehicles, which is good when you have an occasional use car.

If you’re driving your occasional use car in the average mileage range each year, it won’t help to lower your premiums.

Most insurers will offer their clients a low-mileage discount, but you’ll have to drive less than 5,000 miles per year.

If you can commit to doing that in your additional car, it’s a good way to save money.

What does it mean for a car to be rated as an extra vehicle?

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Pleasure usage ratings and low-mileage discounts can save you money, but some companies will go a step further by offering you an extra vehicle rate.

You’ll get a multi-car discount on all of your cars when you insure them through the same carrier, but an extra vehicle premium saves you even more.

You can only qualify for an extra vehicle rate when you own more cars than there are drivers in the household. If you have three cars and it’s only you and your spouse in the home, the third car that you drive occasionally could have a much lower rating than the others.

Driving one vehicle infrequently is a smart way to save money without lowering your coverage limits.

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What is a usage-based insurance program?

Usage-based insurance is much different than a standard policy. Standard companies will ask you about usage and then assign you a rating class, but specialty insurers with these usage-based programs will only charge you premiums based on how much you actually drive.

Since pricing has to do with usage, you are monitored with a special in-dash device.

To buy usage-based insurance on an occasional use car, you’ll have to agree to install a tracking device in your car.

The insurer will then look at the following:

  • How often you drive
  • How fast you drive
  • When you drive
  • Where you drive

The data is used to set your rate and see if you can qualify for usage discounts.

You need insurance on cars you drive daily and cars you rarely drive at all. If you’re looking to find a low rate on the vehicle, you should shop around for standard and usage-based insurance.

Comparing the rates with an online quoting system helps to determine which quoting option is best for you and your family budget. Use our free comparison tool right now!