Car Insurance Lapse

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Here's what you need to know...
  • Whenever a car insurance policy expires or is cancelled, a lapse in coverage occurs.
  • Avoid a lapse in insurance by renewing or buying a new policy before your current one expires.
  • Severe penalties are incurred when one is caught driving under a lapse in car insurance.
  • Use comparison websites and free quote tools like the one on this site to find the best coverage deals!

There are not too many places where you can get caught without car insurance and not pay a price for the lapse. Most states require all drivers to show proof of insurance if stopped by the police.

A couple of states will allow a new driver to pay uninsured motorists fees while without coverage; although, you will still be responsible for damages in the event of an accident. If you own any assets at all, then this can put you in financial distress.

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What does it mean to have my car insurance lapse?

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A lapse in car insurance occurs when the policy expires or is cancelled by the insurance company. Even if the policy is reinstated, or another policy becomes effective 24 hours later, this uninsured period is seen as a lapse.

If an accident or theft happens during those 24 hours, any claims filed are going to be rejected.

A car insurance policy is supposed to be continuous; therefore, a renewal should take place on or before the expiration date.

Since the DMV is notified of new policies, changes, and expirations through a car insurance database, the driver is usually notified by the insurance company and DMV of an upcoming cancellation.

If there is no response or notification to DMV of a new policy, the driver’s license could be suspended.

So how do I avoid a car insurance lapse when I switch insurer?

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Some people change insurance companies when a policy lapses to save money.

You may think the new insurance company is unaware of the lapse in the previous policy, but they can cross reference the policy and cancel your existing policy based on false information.

This small indiscretion could cost you an increase in premiums. It could also affect your credit score.

All you need to do to avoid this is to make sure you have coverage before you cancel the old policy.

What are the penalties and fees for a car insurance lapse?

The policyholder is responsible for late fees associated with late premiums. Eventually, after a couple of notices, the insurance company is going to cancel the policy if premiums are not received.

When you go to another company, they are going to charge a higher premium because of the lapse in coverage.

If your license is suspended because of a lapse in coverage, a reinstatement fee is due, any attorney’s fees attached, and an SR22 form will be required in most states.

The DMV will then monitor your record for any lapses in coverage for the next three years.

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How can I avoid a car insurance lapse?

Most car insurance carriers will work with a policyholder regarding payments as long as the lines of communication remain open. They can add a few extra days to the coverage cycle, although, most companies operate by automation.

In such cases the computer database automatically cancels the policy if it does not detect a payment after the grace period.

Maintaining a policy can be expensive. There are certain categories of people that have a hard time avoiding the high cost of a policy; especially those classified as high-risk drivers by the insurance company.

There are several options to saving on insurance including:

  • Promotional Discount Codes
  • Driving School
  • Clubs and Associations
  • Automatic Seatbelts and Airbags
  • Security System
  • GPS System
  • Energy Efficiency and Less Emissions

Most discounts are good for a 10% savings. Other factors that affect premiums depend on credit rating, driving record, and your location.

How can I find affordable coverage so I can avoid a car insurance lapse?

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Once your insurance record is damaged it is hard to improve your standing so your premiums will be affordable again. Once your license has been suspended, it is hard to find an insurance company that will insure you for a reasonable rate.

Comparison sites are available to those who decide to research their options.

Most states offer an affordable car insurance program. Uninsured motorist fees may be renewed if the renewal transpires before the first-period lapse.

In some states, you are allowed to pay an uninsured motorist fee after the purchase of a car and renew it and is not to be confused with uninsured motorist protection from those who are driving without coverage.

Get online car insurance quotes with just a zip code today!

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