Removing Autos from the Business Auto Policy

Business is bad and I need to save some money on my auto insurance. I want to delete the coverage on some vehicles that aren’t being used right now. They are stored in a secure parking area. Is that OK?

Removing vehicles you still own from your auto insurance policy is probably not a good idea for several reasons.

First and foremost, the State of Texas requires motor vehicle and trailer owners to carry liability insurance on any vehicle that is operated in the state (Chapter 601.052 of the Texas Transportation Code). There are no exceptions for vehicles that are not being operated on a road or that are being stored.

Perhaps an even more important consideration is the possibility that you can be financially responsible for any kind of an accident involving the vehicle, even when it is standing still. For example, if a child gets into the storage area and is injured on the vehicle, you could be held responsible, and the auto insurance policy is the only policy that will provide the needed coverage.

There are other ways you could be held financially responsible for accidents involving the vehicle, and for which you need the coverage provided by the auto insurance policy. Consider these examples:

• What if someone steals the vehicle from your storage facility and has an accident. The injured party might sue you for not providing better security to prevent the theft.
• What if one of your employees unwittingly operates the vehicle without realizing there is no insurance?
• What if you forget to tell us to add the vehicle back to the policy when you are ready to use it again?

These are all good reasons why you should continue the liability coverage on all your vehicles. The physical damage coverage may be important as well. If you owe money on the vehicle, the lien holder requires physical damage insurance. Keeping your vehicle in a storage facility is not an absolute guarantee that it won’t be damaged or destroyed by a fire or windstorm or hail.

Talk to your agent before making a final decision. There may be a way we can shave the premium on your auto insurance without removing all the coverages on a particular vehicle.

This article was prepared and made available to your agent by the Independent Insurance Agents of Texas, which is solely responsible for its content. Please read your insurance policy. If there is any conflict between the information in this article and the actual terms and conditions of your policy, the terms and conditions of your policy will apply. The Independent Insurance Agents of Texas is a non-profit association of more than 1,800 insurance agencies in Texas, dedicated to helping its members succeed, in part by providing technical resources that explain insurance policies sold to their customers.