What happens if my car insurance lapses?
Deep breath! Things in life happen or they do not go as planned. Other things come up and one sometimes we forget to pay our bills or insurance premiums. Short insurance lapses in coverage are somewhat common, and reinstating your policy or purchasing a new one can be quick and easy. Carrying auto liability insurance is a law for drivers in all states except New Hampshire (financial responsibility is still required if you cause an accident), so the important thing is to get insurance again as soon as possible.
What to do if you have an insurance lapse:
Call your previous insurance company and find out how long you’ve been without coverage. If you recently missed a payment, there’s a chance your insurance hasn’t been cancelled yet. There are usually different options. Being on top of when your insurance payments is important but do not hesitate to give your insurance office a call to hear out the different options there is! Here at Capital Insurance Service we offer the service to back-date policies only if there was no accidents or tickets at the time during the lapse but it is case by case.
See if your policy can be reinstated
If your policy was cancelled, find out if it can be reinstated. That means you’ll maintain continuous insurance with the policy you had previously. When reinstating, you’ll pay the past due balance, and you’ll be covered without any lapse.
If your policy can’t be reinstated, get a new one
You’ll then want to get a new policy right away. Starting a new policy may be more expensive, but you need to be insured before you drive. Many companies are able to start your coverage right away.
Insurance lapse grace period
Your policy won’t be cancelled immediately because you miss a payment. Insurance companies are required by state law to provide notice before cancelling your policy. Depending on the state, you’ll usually have between 10 and 20 days. Your company will notify you by mail or email before cancelling your coverage. If you are always on top of checking your email the you should always do the paperless route! If you are not good about checking your email please always choose the paper or by mail option. If you do choose to do by mail option – make sure you open your mail!
Consequences of an insurance lapse
Not having insurance: If your auto insurance expires or cancels, your biggest concern is not having coverage. That means if you cause an accident and hurt someone else or damage their car, you’ll have to pay completely out of pocket. Same goes for damage to your car. Also, if your insurance lapsed and the policy can’t be reinstated, you won’t be able to backdate coverage to cover an accident that happened in the past. Getting into an accident without car insurance could be an enormous and life-changing expense. The other driver could take legal action, which could cost you all of your money and even future wages.
License suspension or fine: In some situations, the Department of Motor Vehicles in your state will be notified that you are without insurance. They can then suspend your license or fine you. You may also be required to carry an SR-22 for several years, which is an added expense on your next auto policy.
Rate increase: Even one day without coverage can result in a higher insurance rate, depending on the circumstances. The cost of starting a new policy is usually costlier than staying continuously insured.
Repossession: Your vehicle could be repossessed by your lending or leasing company. Most lenders require full coverage insurance on the vehicle, as part of the terms of the loan or lease.