What is a car insurance lapse?

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By Sarah Young

4 Minute Read

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We all lead busy lives, and sometimes things just slip through the cracks. If that means letting your veggies go bad or forgetting to floss before bed (sorry, dentists), it just means you’re human. However, some slip-ups can have more serious consequences. For example, letting your car insurance lapse can not only lead to higher insurance rates but also fines and lack of protection in the event of an accident. In this post, we’ll explain what defines a car insurance lapse, what the consequences could be. We’ll also cover what to do if your policy lapses, and how to avoid a lapse in the first place.

What exactly is a car insurance lapse?

A car insurance lapse refers to any period (even as short as one day!) in which you own a registered car but don’t have car insurance. There is no one universal reason for a lapse in car insurance coverage. Perhaps your policy simply ran out. Maybe you missed a payment and your policy was cancelled as a result. Your car insurance coverage could lapse because you were deployed, you no longer drive, or for a myriad of other reasons.

What happens if my car insurance lapses?

Pricier premiums

If your car insurance does lapse, you’ll almost certainly face higher insurance premiums for auto insurance coverage later on. Penalties vary by company, and some insurers don’t penalize customers for short lapses. Many car insurance companies view customers with lapses as riskier than those without a lapse in car insurance. According to an analysis from CarInsurance.com, drivers whose car insurance lapses for 30 days or less see their car insurance rates increase an average of 9%. For drivers whose car insurance lapses between 30 and 60 days, their auto insurance rates jump to an average increase of 13%. Depending on your state, that number can climb as high as 48%.

Are there other negative consequences from an insurance lapse?

Unfortunately, yes! Car insurance is legally mandated in most states and fees and penalties are likely for allowing your car insurance to lapse. Virginia and New Hampshire are two notable exceptions. In these two states, drivers must either pay a DMV fee or file an application to legally drive without insurance. It’s also worth noting that both Virginia and New Hampshire are “at-fault” states. This means that in the case of an accident, the driver who caused it must cover a certain amount of the other driver’s medical and property costs.

State fees

Most states require a  minimum level of liability insurance for all drivers; ignoring this requirement can lead to serious penalties. For example, in states such as Alabama, Arizona, Colorado, Hawaii, and Kentucky, the minimum first offense fine for driving without insurance is a hefty $500. In some states, including Alaska and Connecticut, your license can be immediately suspended.

SR-22 requirements

If you’re caught driving uninsured, you may be required to carry an SR-22.  An SR-22 state-required certificate of financial responsibility. This certificate guarantees you are carrying at least the minimum amount of car insurance for your state and that you will be held financially responsible for any accidents. A variety of situations can incur an SR-22 insurance requirement, and none of them are good. They include:

  • A conviction for driving without insurance
  • Being involved in an accident while driving without insurance
  • Having to reinstate your license after it has been suspended or revoked
  • Multiple traffic offenses within a short period of time
  • Serious moving violations such as reckless or negligent driving
  • A DUI or DWI

An SR-22 is not only an inconvenience when getting car insurance, but it can add anywhere from $1,000 to $3,000 to your premium, depending on your state and the offense. Furthermore, an SR-22 requirement stays on your driving record from one to five years. That means you will need to pay much higher premiums for the entire period!

How do I get car insurance after my coverage has lapsed?

Once you realize your car insurance has lapsed, you should try to get it reinstated as soon as possible! As discussed above, even a short lapse in coverage can have serious consequences. Don’t risk it — take quick action to remedy the situation. Follow the steps below to find a new car insurance after a lapse.

Step 1: Put it in park!

As soon as you realize your coverage has lapsed, do everything you can to avoid driving your vehicle. The last thing you want is to receive a ticket or get into an accident while driving without insurance. Ask a friend for a ride, take the bus, or use a rideshare app, but make sure to stay off the road!

Step 2: Call your insurance provider

With luck your situation is as simple as having forgotten to pay your bill. In the cases where your coverage has only lapsed for a few days, many insurers will be willing to cut you some slack.

If your policy lapse period has lasted longer than a week, your insurer will likely allow you to have your coverage reinstated, but with a higher premium. If you’ve been without coverage for a month or more, you can expect a much higher rate and may even need to find a new insurer. Not all companies are willing to reinstate customers who have had a long-term lapse. It’s in your best interest to talk to your insurer as soon as possible.

This is also a good opportunity to explain the policy lapse to your company. There are plenty of legitimate reasons for a longer-term lapse, including moving abroad, an extended trip, or being deployed overseas. Make sure your insurer is aware of your specific situation so they can help you find the best rate possible.

Step 3: Browse around

If your insurer is unable to give you a reasonable rate after a lapse, don’t feel like you must settle. All insurance companies are different, and you may be able to find a better rate somewhere else.

Step 4: Look for discounts

Whether you stick with your old insurer or find a new one, don’t be afraid to ask for discounts. Your company may offer discounts for anything from choosing paperless billing to passing a defensive driving course.

Step 5: Keep checking in

A lapse in car insurance coverage won’t follow you forever. If you’ve made it several months without any incidents, check back in with your insurer and ask them to reevaluate your rates.

How can I avoid a car insurance lapse in coverage?

While the above steps are helpful if your insurance has already lapsed, it’s ideal to avoid a lapse in the first place. Even if you’re the forgetful type, the suggestions below can help set you up for success (and some serious savings).

Take advantage of grace periods

A car insurance grace period refers to the length of time you can put off paying your premium without having a lapse in coverage. Different companies have different grace periods, so make sure to ask your insurer what their policy is in case of a missed payment.

Sign up for email reminders

These days, email and text messages are ubiquitous, and most of us check ours multiple times a day. So, what better way to keep on top of your payments than signing up for your insurer’s email and/or text payment reminders? They are a convenient way to stay on track, and you get the satisfaction of deleting them once you’re done.

Consider autopay

If you’re worried about forgetting to pay, autopay is a great option to make sure your payments go through on time. Your payment will be automatically paid before the due date avoiding a missed payment entirely!

Keep your budget in mind

Always be realistic about your budget when signing up for car insurance. Getting coverage within your budget means you’ll be less likely to miss payments decreasing the likelihood of an insurance lapse. Lapses in car insurance coverage are never ideal, but nobody is perfect. We hope this blog will help you get back on track after a lapse and avoid a future lapse in coverage altogether.

 

Get a quote with Elephant if you’re thinking of switching your car insurance company, or log in to your online account to keep track of your insurance renewal so you never experience a lapse in coverage.



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