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UPDATED: Mar 13, 2020
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The best rule of thumb to follow is never to let your car insurance policy lapse. A lapsed policy can result in serious consequences, including hefty fines and the cancellation of your car’s license plate and registration. You may even be designated as a high-risk driver, even if you haven’t had any accidents.
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Common Reasons for Lapses in Car Insurance Coverage
Drivers experience car insurance lapses for a variety of reasons. Most drivers experience lapses because they failed to pay their car insurance or had too many late payments. Additional reasons include becoming a high-risk driver and lying on the insurance application.
– Failure to pay
As a driver and a car insurance policy holder, it is important that you get your premium payments to your insurance carrier on time.
If you cannot pay your premium on time, you should contact your insurance agent to discuss when you can make your payment and if paying late will result in a lapse or other penalties.
– Becoming a high-risk driver
Getting into too many accidents or being convicted of a DUI or other moving infraction could result in the cancellation or revocation of your policy if you become designated as a high-risk driver.
Not every insurance company has the ability to write high-risk insurance policies. Therefore, if you find yourself in this situation, it is imperative that you use a comparison tool to locate a high-risk insurance company and purchase a policy.
– Lying on your insurance application
If you lie on your car insurance application and your current insurance company located the lie, they can immediately cancel your policy, which could result in a lapse in your insurance coverage. Using a comparison tool can help you find another policy. Just make sure you fill out your applications accurately.
Penalties for Car Insurance Lapses
If you know your car insurance has lapsed, do not drive any vehicle. The exact penalties vary by state.
For example, if you live in New York and you are caught driving without insurance, you could be arrested, receive a ticket, have your vehicle impounded and have your driver’s license and car registration revoked.
- Designated as a high-risk driver
- Having your rates increase
- Having the DMV cancel your car’s registration and plate
- DMV and insurance company fines and fees
- Having your driver’s license revoked
Avoiding Lapses in Your Insurance Coverage
Your car insurance company will notify you in writing if your policy is about to lapse, change or get canceled. It is important that you make a note of the date and find another policy before the cancellation or lapse date in your letter.
It is also important to understand that if your letter states that your car insurance will end on a certain date, like May 1st, your insurance company means that at 12:01am on May 1st you will no longer have coverage.
If you get into a car accident at 3pm on May first, you will be entirely responsible for all of the expenses of the accident, including your property damage and medical expenses and the other drivers accident related expenses.
You can find another policy quickly by using an auto insurance comparison tool. These tools allow you to rapidly retrieve multiple insurance quotes from several different carriers.
- Always pay your car insurance on time
- Do not lie or misrepresent yourself on your car insurance application
- Obey all traffic laws
- Don’t drink and drive or use drugs and drive
- Read your policy and make sure you understand it
Switching Insurance Companies without a Lapse in Coverage
In some instances, it may be beneficial for you to switch car insurance companies. Common reasons for switching include better customer service and lower rates. However, before you cancel your current policy, you should locate and buy a new policy by using a comparison tool.
- Shop for car insurance using a comparison tool
- Contact your current insurance carrier to see when your current policy ends and if canceling your policy early will result in termination fees
- Purchase your new auto insurance policy and print your new insurance cards
- Make sure your new policy is active by checking your account or calling your new agent
- Call your old agent and cancel your old policy. Inform him or her that you have new insurance coverage
For obvious reasons, it is very important that you avoid car insurance lapses. If you find yourself on the receiving end of a cancellation letter, you need to be proactive. The minute you receive the letter, you need to read it thoroughly and call your current insurance agent for more information.
If you find that you cannot easily reinstate your current policy, you would do well to use a comparison tool to find and buy a new car insurance policy before the end date of your current policy.
If you allow your insurance to lapse, you could be held entirely responsible if you get into a car accident. You may also be subject to fines, fees, and other legal and civil consequences.
Don’t allow your coverage to lapse. Shop to compare rates before you have a loss of coverage. Enter your zip code into our FREE tool to get started!