Lapsed Auto Insurance? Get Covered Today

What Can Cause an Insurance Lapse?

More often than not, when an auto insurance company cancels a policy, it's due to the non-payment of the policy premium. If you miss the due date for your auto insurance, an insurance company typically sends out a cancellation notice giving you additional time to pay, which is called a grace period. If you still do not pay before the date on the cancellation notice, your policy will be canceled as of that date. It will remain canceled until you apply for reinstatement with your insurance company or obtain replacement car insurance through another company.

In some cases, a policy will be canceled for other reasons. For example, a policy might be canceled because a policyholder does not provide the requested underwriting information. Or, in some cases, a car insurance company will not offer to renew a policy once it expires for some type of underwriting reason. These situations typically arise if an insurance company no longer feels your policy is a good risk or because an insurance company is no longer offering car insurance coverage in your area for some reason.

Risks of a Car Insurance Lapse?

If your car insurance lapses, you will risk being uncovered if you are in an accident, and you may face significant fines and penalties from your state for driving without insurance.

A driver with a lapsed car insurance policy may be able to apply for reinstatement with their company. If you qualify for reinstatement, you will typically have to sign a statement that you have had no potential claims while the policy was canceled and pay a certain amount of money to your insurance company before your coverage is reactivated.

Some car insurance companies will not offer to reinstate your policy. If this happens, the number of companies that will insure you with a lapsed policy will be limited. Because of the lapse, you will more than likely pay a higher premium on your new policy than you did on your canceled policy.

Driving Without Insurance Risks?

If you are pulled over by a police officer or involved in a car accident while your vehicle is uninsured, you will face steep fines, possible impounding of your vehicle, and potentially even jail time. In addition to these possibilities, if you are involved in a car accident while you are uncovered, you will be responsible for all of the damages you cause to other peoples' property and their injuries out of your own pocket.

Whenever you purchase a new car insurance policy, allow one to cancel, or get your car insurance reinstated, your insurance company will electronically notify your state's Department of Motor Vehicles so that the Department has current information about your insurance status. If a police officer pulls you over, the officer can access this information.

Getting Coverage After an Insurance Lapse?

After a car insurance lapse, you can either pursue your insurance company to reinstate your policy or obtain new insurance through another insurance company. If you have to obtain new insurance, the number of days that your previous policy was canceled will be accounted for in your new rate, and a surcharge will be charged against your new policy for the lapse in coverage. Some insurance companies do not offer coverage to drivers with a lapse in coverage, so the number of companies available to you after an insurance lapse will be less than if you did not have the lapse.

If your auto insurance bill is coming due and you know you cannot make the payment in time, you should reach out to your insurance agent or insurance company to request special accommodation. Your insurer can extend the due date, allow you to skip an installment, or help you make other payment arrangements so your policy does not cancel.

How Long Does a Lapse Stay on Your Record?

An insurance lapse will stay on your record for between six months and three years, depending on your state. This means that you will pay a higher insurance premium on your car until the lapse is no longer on your driving record. A history of lapsed insurance may also make you ineligible to purchase car insurance through certain insurance companies.

To avoid a lapse in your car insurance coverage, keep track of your bill's due date and ensure you have enough money to pay the car insurance ahead of the cancellation date. You can also elect an automatic payment plan so that your monthly, semi-annual, or annual auto insurance premium is automatically deducted from your checking account or automatically charged to your credit card to avoid an insurance lapse.

Lapsed Auto Insurance FAQs

Q. What does it mean when auto coverage has lapsed?

A. When auto coverage has lapsed, it means that your auto insurance policy is canceled due to non-payment or underwriting reasons.

Q. Can lapsed insurance be reinstated?

A. You may be able to reinstate your lapsed auto insurance policy after it has been canceled. You must contact your insurance agent or insurance company to request a reinstatement. If you are eligible, your insurance company will more than likely require that you sign a statement that you did not have any potential claims while your policy was canceled and will require a payment to bring your policy current before your coverage is reactivated.

Q. Can an insurer refuse to reinstate after a lapse in coverage?

A. An insurer can refuse to reinstate your policy after a car insurance lapse. Your policy may have been canceled for longer than the allowable time period, or your insurer may just refuse reinstatement of your policy due to state guidelines they must follow or because they no longer feel you are a good insurance risk.