As a car owner, managing your vehicle involves several responsibilities, and car insurance is a critical one. There are times when you might consider canceling your car insurance, such as when you’re not using your vehicle for a while or planning to sell it. A common question that arises in these situations is: Can I cancel my car insurance before returning the license plates? This is a crucial question, and the answer often depends on your location and local regulations. Let’s delve into this topic, particularly focusing on the rules and guidelines that car owners need to be aware of to avoid potential penalties and ensure compliance.
The Golden Rule: Plates First, Then Cancellation
In many jurisdictions, including North Carolina, the principle is clear: always return your license plates before you cancel your car insurance. This might seem counterintuitive, but it’s rooted in state laws designed to ensure continuous insurance coverage for all registered vehicles. These regulations are in place to protect all drivers on the road.
Canceling your insurance before returning your license plate can lead to significant issues, primarily financial penalties. Why is this the case? Because as long as your vehicle is registered and has license plates assigned to it, it is legally considered an active vehicle on the road, even if you are not driving it. Therefore, it is mandated to have continuous liability insurance coverage.
Why You Shouldn’t Cancel Insurance Before Returning Plates
The main reason you should avoid canceling your car insurance before returning your plates is to prevent penalties for a lapse in coverage. States like North Carolina actively monitor insurance coverage for registered vehicles. If the system detects that a vehicle’s insurance has been canceled but the license plates are still active, it triggers a notification and potential fines.
These fines are not trivial and are designed to discourage drivers from having uninsured vehicles, even for short periods. The state views continuous insurance as a matter of public safety and financial responsibility. By ensuring all registered vehicles are insured, states aim to minimize the financial burden on responsible drivers in case of accidents involving uninsured motorists.
Scenarios Where Plate Return is Crucial Before Insurance Cancellation
Let’s look at specific scenarios where returning your license plates before canceling insurance is absolutely necessary:
- Vehicle Storage: If you plan to store your vehicle for an extended period, perhaps during a deployment, long-term travel, or seasonal storage, you might think about canceling insurance to save money. However, even if your car is parked in a garage, as long as it’s registered and has plates, you are typically required to maintain insurance. The correct procedure is to return the plates to your local Department of Motor Vehicles (DMV) or equivalent agency first. Once you have officially returned the plates, you are generally then free to cancel your insurance without penalty.
- Moving Out of State: When you move to a new state and register your vehicle there, you will naturally want to cancel your old insurance policy. Again, the sequence is important. First, register your vehicle in your new state and obtain new license plates. Crucially, before canceling your insurance from your previous state, return your old license plates to the DMV of your previous state. This action officially notifies them that your vehicle is no longer registered in their jurisdiction, paving the way for you to cancel your insurance without incurring penalties related to continuous coverage in that state.
- Selling a Vehicle: If you sell your vehicle, you will transfer ownership and the registration will be updated. As the seller, you should remove the license plates from the vehicle upon sale. Returning these plates to the DMV is a crucial step. Only after you’ve returned the plates should you proceed to cancel your insurance policy for that vehicle. This ensures you are no longer liable for insurance on a vehicle you no longer own or have registered in your name.
What Happens if You Cancel Insurance Before Returning Plates?
As highlighted earlier, canceling your insurance before returning your plates can lead to penalties. In North Carolina, for example, this results in a fine for failure to maintain continuous insurance coverage. The specific amount of the fine and the processes involved can vary by state, but generally, you can expect:
- Financial Penalties: Fines can range from a few hundred dollars upwards, depending on the duration of the insurance lapse and the specific state regulations.
- Reinstatement Fees: In some cases, besides fines, you might also face fees to reinstate your vehicle registration or driving privileges.
- Increased Future Insurance Premiums: An insurance lapse can be viewed negatively by insurance companies, potentially leading to higher premiums when you seek insurance in the future.
Exception: Moving Out of State – Penalty Waiver
There are often provisions and exceptions to these rules. For instance, North Carolina offers a penalty waiver for insurance lapses if you’ve moved out of state and registered your vehicle in your new state. To qualify for this waiver, you typically need to:
- Provide proof of out-of-state registration: This registration must show that you registered the vehicle in your new state within a specific timeframe (e.g., 30 days) of canceling your North Carolina insurance policy.
- Submit a copy of your current out-of-state registration card to the NCDMV.
- Return your North Carolina license plates or submit an affidavit (form MVR-18A) if the plates are lost, stolen, or destroyed.
This waiver acknowledges that people move states and need to transfer their vehicle registration and insurance accordingly. By providing the required documentation and returning your NC plates (or explaining why you can’t), you can avoid penalties for the period between canceling your NC insurance and registering in your new state.
How to Return Your License Plates
The process for returning license plates is usually straightforward. In North Carolina, you have a few options:
- In Person: You can return your plates at any NCDMV license plate agency. This is often the most direct method, and you can request a receipt for your records.
- By Mail: You can mail your plates to the NCDMV Vehicle Registration Section at the provided address (in the original article). Mailing is convenient but remember to request a receipt if you need proof of return.
- Drop-Off Service: Some locations, like the North Raleigh License Plate Agency, offer a drop-box service for plate returns. However, receipts are generally not provided for drop-box returns, so use this method only if you don’t require proof of return.
- For Lost or Stolen Plates: If your plates are lost or stolen, you’ll need to complete a License Plate Turn-In Verification form (MVR-18A) and submit it to an NCDMV license plate agency or mail it in. Online submission might also be available.
Key Takeaway: Return Plates First to Avoid Insurance Cancellation Issues
To summarize, the answer to “Can I Cancel My Car Insurance Before Returning The Plates?” is generally no. To avoid fines, penalties, and potential complications, always prioritize returning your license plates to the appropriate motor vehicle agency before you cancel your car insurance. This simple step ensures you remain compliant with vehicle registration and insurance laws and avoid unnecessary financial burdens. Whether you’re storing your vehicle, moving states, or selling a car, plate return should be a primary step in the process before you cancel your insurance policy. Always check with your local DMV or equivalent agency for the most accurate and up-to-date regulations in your specific location.
