There comes a time in every driver’s life when he outgrows his current vehicle. It may be due to family additions that make the size of the current vehicle insufficient, it could be due to safety standards and technological advances, or it could simply be because the thrill of driving that particular model, is gone.
When you decide to get a new vehicle, you have two choices for the old. You can sell it privately, you can give it to a friend, family member or charity, or you can trade it in for a new model. No matter which option you choose, it's important that you maintain insurance coverage until the title is transferred.
Once you've explored potential gift tax liabilities and charitable options and you've decided to give your vehicle away, you might think that it no longer needs insurance coverage. But if your car is damaged, stolen, or involved in an auto accident before the title is transferred to the recipient then you could be personally on the hook for the loss. Knowing in your mind that you intend to give the car away is not enough reason to cancel the insurance.
The Private Sale
When advertising for the private sale of your automobile, you may have many people who respond to the ad and wish to take your vehicle out for a test drive. You cannot rely on the fact that these individuals have insurance when they test drive your car; instead, you must make sure that you have sufficient auto insurance coverage to protect yourself from damages and liabilities while they test drive it. In addition, after they’ve paid you for the sale, it's still a good idea to maintain insurance coverage until you've taken the steps to transfer the title. That way, if the car is involved in an accident that results in a liability, you will not be responsible for paying for the damages.
Even on the day you drive your car to the lot and arrange for the trade-in, you should ensure that you have proper insurance coverage. You could get into an accident on the way to the lot or even while at the lot, or your car could be damaged in another kind of insurable incident before the transaction is complete.
By maintaining insurance all the way until such time as the title is no longer in your name, you protect yourself thoroughly from liabilities and damages. For your free Michigan auto insurance policy review or to find out more about when it's appropriate to cancel a policy, give us a call at 800-220-5582.