When you’re planning an extended trip, preparation means more than just making hotel and rental car reservations. You also have to think about matters back home.
If you will be out of the country or away from home for an extended period of time, you might need to reevaluate your insurance portfolio. (If you’re going on a shorter trip, check out my previous post on travel insurance.)
You may be planning to cancel or suspend your policy while you’re away, but before you do that, talk to your agent about your travel plans and get his or her advice on your insurance needs. Think about the following questions as you’re planning your trip:
Canceling your insurance could cost you more money in the long run than the short-term savings. Insurance companies use a rearview mirror, keeping track of incidents that occur after you cancel. Those may negatively affect you when you reinstate or rewrite your policy.
If you’re going to be traveling for less than six months, I advise you to keep your coverage. Make arrangements before you leave to pay your premiums on time and keep your coverage valid. If something happens and you need insurance coverage in the brief window of time before you travel, or while you’re trying to set up coverage when you return, you may be out of luck. Insurance companies will be sticklers when looking at the dates of your claim and when you canceled or renewed insurance coverage.
Maintaining insurance coverage can also save you money when you’re applying for a new plan. For most insurance policies, you must maintain insurance coverage for at least six months prior in order to get a competitive rate. This is called “proof of prior” and can save you a significant amount of money.
With auto insurance, if you’re going to be gone for less than six months, you will want to explore alternatives to canceling your insurance and having a lapse in coverage. You can store your plates and carry comprehensive coverage for a nominal premium. This will protect your vehicle(s) while stored in case of fire, theft, or vandalism.
If you are planning on being away for more than six months, you may be better off surrendering your plates and renewing your coverage when you return.
Linda Rey is a licensed insurance agent at Rey Insurance with a broad spectrum of expertise in life, accident, health, property and casualty insurance as well as retirement planning and college funding strategies.
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