Deployment and car insurance: pausing, reducing and saving

A deployed service member can usually cut the cost of a car that will sit unused, but the Servicemembers Civil Relief Act (SCRA) does not give a right to suspend or cancel an auto policy; its insurance protections cover life insurance and professional liability insurance. The savings come instead from the insurer's own storage or reduced-coverage options, and from state rules about what a registered vehicle needs. Dropping coverage entirely is the move most likely to cost more later.

What the SCRA does and does not cover

The SCRA is a federal law, codified at 50 U.S.C. section 3901 and following. People often assume it lets a deployed member pause everything. It is narrower than that.

According to Military OneSource, the Defense Department's support site, the SCRA's insurance protections are for life insurance (insurers cannot terminate coverage or require additional premiums during military service) and professional liability insurance (professionals called to active duty can suspend a policy by written request, with a refund of premiums paid while on duty). I found no provision in the pages I opened that lets a service member suspend or cancel a personal auto policy on the strength of orders. The Cornell Legal Information Institute's listing of the act shows subchapter IV, sections 3971 to 3979, as the life insurance subchapter.

The act does touch the money around a car. Four provisions are worth knowing:

• Vehicle leases. Under 50 U.S.C. section 3955, a lessee of a vehicle used for personal or business transportation can end the lease at their option after qualifying events, such as signing before entering service of 180 days or more, or receiving certain military orders or a stop movement order. The lessee delivers written notice with a copy of the orders and returns the vehicle within 15 days of the notice. Unpaid lease amounts are prorated through the termination date, and the lessor may not impose an early termination charge.
• Interest rate cap. Section 3937 caps interest at 6 percent a year on debts incurred before military service. The servicemember must notify the creditor in writing within 180 days of leaving service, with a copy of the orders. "Interest" under that section includes service charges, renewal charges and fees, except bona fide insurance, so it does not lower an insurance premium.
• Installment contracts. Section 3952 says that if a servicemember paid a deposit or installment before entering service, the contract to buy or lease property, including a motor vehicle, cannot be terminated for breach, and the property cannot be repossessed for that breach without a court order.
• Taxes and fees. Section 4001 lets a servicemember keep their existing residence for tax purposes, and treats motor vehicles as personal property not located in the duty-station state; "taxation" covers licenses, fees and excise taxes on vehicles and their use when paid in the home state.

None of that is an insurance right. If you want a lease ended or a loan rate lowered, the SCRA is the tool. If you want a cheaper policy, the tools below are. A military legal assistance office can advise on your facts; the Military OneSource page recommends contacting your nearest one.

The options for a car that will sit

Here are the realistic choices, with what each costs in coverage. Use them as a menu, not a recommendation; the right one depends on who might drive the car, whether it is financed, and your state.

Comprehensive-only or "storage" coverage

comprehensive coverage pays for losses that are not collisions: theft, fire, vandalism, hail, falling objects. A parked car mostly faces those risks, which is why insurers allow dropping liability and collision on a car that is not being driven. Our guide to insuring a car you are not driving covers the general case.

Some insurers run programs for service members. GEICO's Storage Protection Plan page says it can suspend or reduce coverage for military policyholders whose duties require storing a vehicle, and that the vehicle must be stored for 30 days or more. The page directs people to call its military center and does not describe online enrollment or what coverage stays. GEICO's military discounts page separately describes an Emergency Deployment Discount for members deploying into Defense Department-designated imminent danger pay areas, available if the vehicle is stored under one of its approved storage protection plans, with geographic limits and some military operations excluded. I name this program only as an example of how these work; other insurers have their own, and terms change. Ask yours.

Cancelling entirely

Cancelling looks cheapest. It is often the most expensive choice, for the reasons covered below.

What the state requires while the car stays registered

A car that stays registered generally has to stay insured. The rules differ by state, and a military member's registration may be in a home state different from the duty station, so check where the car is registered.

California shows how strict it can be. The California DMV says insurers must electronically report private-use vehicle insurance information to the DMV under Vehicle Code section 16058. If the DMV does not receive proof of insurance, the registration is suspended and the vehicle cannot be operated or parked on public roads. The DMV's page also says you must notify it before cancelling insurance to avoid a suspension, and that for a vehicle not operated or parked on a California roadway you can file an Affidavit of Non-Use (form REG 5090), which cannot be filed after the registration has expired.

That is one state. Others have their own non-operation filings or none at all, and some treat a lapse as an offense. Use state car insurance requirements lookup or your state motor vehicle agency before dropping coverage on a registered car. The sequence for a lapse is covered in after an insurance lapse: notices, suspension and reinstatement.

A lender or lessor may still require coverage

If the car is financed or leased, the loan or lease agreement usually requires comprehensive and collision coverage for the term, with the lender named as lienholder or loss payee. Dropping collision on a financed car can breach the agreement even when your state allows it. A lender that finds no coverage can buy its own policy and charge you; see force-placed insurance: when your lender buys coverage for you.

Before you reduce coverage on a financed or leased car, get the lender's requirement in writing and ask whether comprehensive-only storage satisfies it. If you plan to end a lease under the SCRA, do that formally under section 3955; do not stop paying or stop insuring and hope the lessor accepts it.

Garaging address and permanent change of station

A permanent change of station (PCS) move changes where the car sleeps, and insurers price on that. The garaging address feeds the territory factor in a rate. For a sense of how finely a regulator can allow this, California's regulation on mandatory and optional rating factors, 10 CCR section 2632.5, lets insurers use claims frequency and severity for up to 20 garaging-location bands, based on ZIP codes or census tracts. In practice, moving a car from a quiet rural base to a dense metro area can change the premium in either direction, and the reverse is just as possible.

Notify the insurer when the garaging address changes. An address that no longer matches where the car is kept is a misstatement the insurer can act on, and that can complicate a claim. The article PCS moves, deployments and car insurance for service members covers legal residence versus duty station and moves between states in more depth. The general car insurance for military members and veterans guide covers the wider market.

Leaving the car with family

Not everyone stores a car. Many leave it with a spouse, parent or sibling. That changes the risk, and an unchanged policy is not always enough.

• The policy follows the car, not the person. The service member who owns the car is the named insured. Anyone else who drives it regularly should be listed. Coverage for permissive use by someone you allow to drive can exist, but insurers limit regular use by household members who are not listed.
• Unlisted drivers are a claim risk. Our article on claims when the driver was not listed on the policy explains how an insurer can deny or reprice when the regular driver was never disclosed.
• Do not use storage coverage for a driven car. Comprehensive-only coverage has no liability. If the person who now drives the car causes an injury, there is no policy to pay and the owner can be exposed. Before a family member drives, restore full coverage.
• Retitling is a separate decision. Moving a title to a relative changes the insurable interest and the lender's consent requirements, so ask the insurer, the lender and the state first.

Military discounts versus general programs

Two different things go by the same name. One is a military discount, a percentage off for active duty, retirees, Guard and Reserve. GEICO's page, for example, says up to 15 percent on the total insurance premium. The other is a storage or deployment benefit, which changes the coverage and the price because the car is not in use.

They are not the same savings and can stack or conflict. Ask:

1. Does the military discount remain on the policy while I am deployed, and does it survive a storage plan?
2. If I put the car in storage, do I lose multi-car, tenure or paid-in-full discounts?
3. Does the insurer require orders, and for what dates?
4. Is the storage option available in my state?

Discounts are also available outside military-focused insurers. Compare using the same coverage limits; our article on how to audit your policy for discounts you are not getting can help. The wider category is described in affinity, employer and occupation discounts. Pricing varies by insurer and state, and the percentages on marketing pages are ceilings, not what your quote will show.

Why dropping coverage entirely is the riskiest choice

The saving from cancelling is real but short-lived. The costs show up later:

• A lapse in coverage. Insurers often price on proof of continuous prior coverage, and a gap can raise the price or limit which insurers will quote. See the prior insurance discount: what counts as continuous coverage.
• Registration action. As the California DMV page shows, a state can suspend registration when it receives no proof of insurance, and the vehicle cannot then be driven or parked on public roads.
• A breached loan. A lender can treat missing coverage as a default or buy force-placed insurance at your expense.
• No theft or weather protection. A car parked outside for nine months is exposed to a hail storm with nothing behind it.
• Reinstatement friction. Getting a policy back after returning home takes time you may not have in the first week home.

The refund on a mid-term cancellation also depends on the state and the insurer's method; see cancelling car insurance mid-term: how your refund is calculated.

A worked example, with invented numbers

Say a service member is deployed for nine months and owns a financed sedan. The six-month premium for full coverage is $1,000. A comprehensive-only quote for the same car is $120 for six months. These are hypothetical.

On those numbers the storage option saves $1,320 against full coverage, and cancelling saves another $180 that is easily lost to a lender's charge, a re-registration fee or a higher price after a gap. The numbers are invented; your quote decides.

A checklist before the orders take effect

1. Read the loan or lease for the insurance clause, and get the lender's storage position in writing.
2. Check the state rule for a registered, unused car, including any non-operation filing, and do it before cancelling anything.
3. Call the insurer and ask what suspension, storage or reduced-coverage options exist, including minimum storage periods and any proof of orders.
4. Decide who may drive the car and make sure that person is listed on a policy with full coverage.
5. Store it securely, and ask whether the insurer requires a garage, base lot or other secured location.
6. Confirm the new garaging address if the car moves.
7. Set a reinstatement date with the insurer and put it in a calendar, with a note to restore liability and collision before driving.
8. Name a person with authority to talk to the insurer if you are unreachable, if your policy allows it.

Common questions

Can I cancel my car insurance without penalty because I am deployed?

The SCRA provisions I could confirm do not give a right to cancel an auto policy. Insurers may allow cancellation or storage on their own terms, and the refund is governed by state law and the policy. Ask the insurer for the terms and the refund method before cancelling.

Does comprehensive-only coverage meet my state's requirement?

Often it does not satisfy a requirement for liability coverage on a car that is driven. Whether it is enough for a car that is parked depends on the state and on whether the registration has been placed in non-use. Check with the motor vehicle agency, as in the California example above.

Will my rate go up when I come back?

It can. If coverage was continuous, even at a reduced level, the insurer has a record of continuity. If it lapsed, a gap can matter. Restoring the full policy through the same insurer is often simpler than starting over; ask.

Can the lender force me to keep full coverage while I am overseas?

If the loan agreement requires it, yes. The SCRA gives other protections on loans and leases, such as the 6 percent interest cap and limits on repossession, but I found no section that waives an insurance covenant. A legal assistance office can review your agreement.

Key takeaways

• The SCRA's insurance protections cover life and professional liability insurance; I found nothing in it that lets you suspend a personal auto policy, though it does help with vehicle leases, loan interest and repossession.
• Insurer storage or reduced-coverage programs, such as comprehensive-only coverage, are the usual way to save on a car that will sit, with eligibility terms that vary.
• A registered car generally must stay insured; check your state, because some states require a non-use filing before you cancel.
• Lenders and lessors may require coverage regardless of use, and a family member who drives the car needs full, properly listed coverage.
• Cancelling entirely risks a lapse, registration trouble and a higher price later; get every option in writing before deployment.