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I don't remember all the details but, when i was building up my camaro i contacted the insurance company and inquired if i could suspend my insurance for a few months. They gave me the same story they gave you, cancel the insurance and you have to hand in your plates.
However, the agent gave me the option of removing the liability insurance and switching to a "storage" policy that would allow me to keep the plates. The storage policy, iirc, was more expensive then the liability.
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