A lapse in coverage refers to a period when you were not protected by an effective insurance policy. Insurance companies typically punish you by boosting the cost of your policy whenever you renew or acquire it, whether the lapse in coverage was intentional or unplanned.
When you fail to pay your premiums, your insurer cancels your policy, or you move between two plans and terminate your old coverage before your new policy takes effect, you have a lapse in insurance coverage. Based on your situation, an insurance lapse might last as little as a day or as long as a year.
Regardless of your situation, avoiding a lapse in vehicle insurance might save you a lot of grief. If you are engaged in a vehicle accident and do not have insurance coverage, you may be liable for covering damages and medical bills out of your own money. While your insurance coverage lapses and you possess a car, you may suffer fines or other punishments, such as additional costs from your lienholder or suspension of your driver's license.
If you do not own a car, you may believe that you do not need insurance. However, bear in mind that if you drive at all, vehicle insurance can help you pay for the costs involved with a car accident. Non-owner car insurance, for instance, secures your money while you're on the road. This low-cost option is available from most major insurance companies, and it can help you avoid a lapse. It might be an excellent alternative, for example, if you sell your automobile and want to take your time buying a new one.
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The Effects of a lapse on Car Insurance
If you let your insurance lapse, you'll have to pay extra for coverage when you renew it. The amount you will pay after a lapse is determined by numerous factors.
In addition to higher rates, you will lose any vehicle insurance discount you received for continuous coverage. The amount of the discount varies per provider, however, losing it after a lapse might increase your overall costs by at least 10%.
The cause for your coverage lapse determines how much your auto insurance premiums will rise once it expires. If you lost coverage for a brief period because you couldn't afford to pay your premiums, your rates will be lower than if your license was suspended after a DUI or at-fault collision, which would make you a high-risk driver.
A lapse in your vehicle insurance coverage might have serious consequences. Most states prohibit you from driving legally if your insurance lapses.
If you drive regardless, you run the risk of losing your license and having to pay costly reinstatement fees, penalties, and even jail time if you harm someone while driving uninsured. You'll also be responsible for any costs related to an uninsured accident, so if you reverse in traffic and damage someone else's car, you'll have to pay for it out of pocket.
Even though you don't drive without insurance, a lapse in coverage might have serious consequences.
- Increasing future car insurance rates: If you let your insurance expire for any length of time, you may have to pay extra for coverage when you reapply. This is because insurance lapses make you more difficult to insure.
- Making it harder to find coverage: If numerous insurance companies consider you to be too dangerous to insure after a vehicle insurance lapses, finding inexpensive coverage in your region may be more challenging. You may have to accept more expensive coverage, poor customer service, and fewer coverage alternatives.
- Repossession of your vehicle: Most lenders and lessors demand you to have full coverage insurance as part of the conditions of your financing arrangement. If you refuse to make your insurance timely payments and your policy is canceled, a delay in coverage may result in the repossession of your car.
- Impacting on your driving record: When someone's insurance coverage lapses, certain states require insurance companies to inform the DMV. A lapse in coverage may be noticed on your driving record and result in fines based on your state of residence.
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What Should You Do If Your Insurance Coverage Lapsed?
If your automobile insurance unexpectedly expires, contact your existing insurer first. While it is not a guarantee, they would likely restore your coverage with little penalty, especially if the lapse was only a few days.
It's worth shopping around for a better bargain if your insurance needs you to acquire new coverage. But do it soon - the longer you go without auto insurance, the higher the penalty will be when you reinstate it.
Driving uninsured is something you should never do. It is unsafe and unlawful to drive without insurance. The punishments for driving while uninsured vary from state to state, but common punishments include losing your license and having your vehicle seized. You may even risk jail time if you are involved in a collision while driving uninsured. If you are unprotected and need to drive, you must reinstate your insurance coverage.
Of course, if you are unable to make your auto insurance payment, this is easier said than done. To obtain a low premium, we usually recommend checking with various insurers. You may be able to save even more money if you qualify for further discounts or reduce the amount of coverage you have.
How To Avoid A Car Insurance Lapse
Making on-time payments, telling the truth when acquiring coverage or filing a claim, and maintaining a clean driving record on the road are the best strategies to prevent a lapse in auto insurance. To avoid a coverage lapse you should also:
- Contact your insurance company: If you get a cancellation notice, you should immediately call your insurance carrier. This way, you'll be able to learn about your company's grace period, probable strategies to avoid termination, and potentially reinstate your coverage before it's too late.
- Know your policy's expiration date: Keep track of your policy's term dates so you don't forget to update your insurance coverage (if it doesn't automatically renew) when it comes up for renewal.
- Start a new policy on time: If you're switching vehicle insurance coverage, ensure sure your new policy begins on the same day that your old one finishes. A lapse in coverage might occur even if there is only a day between plans.
- Shop for quotes: If your auto insurance costs have become unaffordable, you should compare estimates from alternative firms. A high rate with one insurer does not always imply a high rate with another.
- Evaluate your coverage levels and deductibles: If you're having difficulties paying premiums, you might modify your coverage. If you're paying for more coverage than you need or your deductible is too low, you may lower your total rates by changing your policy.
How To Maintain Auto Coverage?
If you're having problems paying your insurance premiums due to financial challenges, don't give up.
Here are some suggestions for lowering your insurance costs and making your coverage more affordable:
- Shop around for quotes. You may be surprised by the rate differences across insurers. Comparing automobile insurance quotes from various sources might help you discover the best deal. You could also wish to consult with an individual insurance agent who can assist you in selecting a carrier that offers the correct coverage options for you.
- Consider lowering your policy limits. Every state has a basic liability requirement, but if you're spending more for coverage than that, you can lower your limits and lower your rates. If you choose to cut your coverage limits, keep in mind that you'll be taking on more financial risk.
- Look for discounts. Most major insurers provide a variety of discounts, some of which are simple to obtain. Many insurers, for example, may provide you with a discount if you pay your premiums online or on a recurring basis. These insurance discounts could help you save money. Enrolling in a usage-based telematics service, which may save you a lot of money if you drive carefully, is a good idea.
- Reevaluate your coverage types. There may be an opportunity to change your vehicle insurance coverage if you have coverage that overlaps with other products. If you have roadside assistance protection elsewhere, for example, it may be worth cutting it from your policy. However, speaking with a certified agent ahead of time is essential to avoid any coverage lapse.
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Conclusion
You must pay your auto insurance premium on a monthly, bi-monthly, or annual basis for your coverage to be valid. Many companies provide grace periods to drivers who are late with their payments, but if you surpass this grace period, your policy will lapse and you will no longer be able to drive legally.