You can have a lapse in coverage if your policy is canceled, if you do not renew or reinstate your policy, or if you switch auto insurance companies with any time between policy periods
A lapse in coverage could result in fines, higher insurance rates in the future, and even the repossession of your car if you lease or finance it
You should try to reinstate your auto policy within your insurance company’s cancelation grace period. If you cannot, you should buy a new one
To avoid a lapse in coverage, pay your premiums on time and be mindful of the terms of your car insurance policy
Car insurance is essential financial protection for drivers. A car insurance policy will cover you if you get into a car accident and injure someone with your vehicle or damage their car. It can also cover your car from damages caused by car accidents and other perils, like lightning strikes, theft, vandalism and animal infestations.
In order for your policy to remain active, you need to pay your car insurance premium either monthly, bi-annually, or annually. If you do not pay your car insurance, your policy will eventually lapse. If you lapse in coverage, you will no longer be protected.
All but two states require drivers to have a car insurance policy in order to legally drive, so driving while you have a lapse in coverage could result in expensive fines and bills if you get into an accident.
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A lapse in coverage is a period of time that you do not have car insurance coverage for your car. There are a few common ways you can lapse in coverage:
Short lapses in coverage are not the end of the world and it is usually fairly easy to reinstate your policy. However, if you do not reinstate your policy or buy a new one, your insurance company will fully cancel your policy and you will lapse in coverage.
A lapse in coverage could result in a few different consequences.
You will be uninsured: This might be obvious, but you will no longer have car insurance coverage once your policy lapses. In almost all states, this means you will not be legally allowed to drive on public roads. If you get caught driving without car insurance, depending on what state you live in, you could be fined or your license could get suspended. If you get into an accident while uninsured you will be stuck paying for repairs or injuries out of pocket.
Increase in future car insurance rates: If you have a lapse in coverage, it will stay on your insurance record, which insurance companies consider when calculating your insurance rates. Insurance companies factor-in your driving and insurance history to determine how at-risk of a driver you could be, and lapsing in coverage will raise your risk profile. Some insurance companies may refuse to insure you if you have multiple lapses in coverage.
Repossession of your vehicle: If you lease or finance your car, your vehicle could be repossessed by your leasing or lending company. Most lenders require you to have a full coverage car insurance policy during your leasing period.
Impact on your driving record: Some states require insurance companies to notify the DMV when someone lapses in coverage. Once you have a lapse in coverage, it may be noted on your driving record, which could result in fines depending on what state you live in.
The good news is your insurance company is required by law to contact you before they cancel your policy. Even better — most insurance companies will give you a 20 to 30 day grace period to catch up on the premium payments that you owe before they fully cancel your policy and you lapse in coverage.
What you should do if you receive a cancellation notice from your insurance company:
The best way to avoid a lapse in car insurance is to make your payments on time. If you receive a cancelation notice, you should contact your insurance company right away to get your policy reinstated.
Below are few other tips to avoid a lapse in coverage:
Kara McGinley is an insurance editor at Policygenius, specializing in home, auto and renters insurance. She previously worked as a freelance writer and copywriter, and has been writing about insurance since 2019. Kara is an expert at making complicated topics like property insurance simple to understand. Her work can be found in Teen Vogue, The Culture Crush, and more.
Kara has a B.A. in English from East Carolina University.
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