What If My Car Insurance Lapses?
Last Updated on November 12, 2020
So you forgot to pay your car insurance payment for the month. Or maybe you knowingly let your car insurance expire. What happens when your car insurance lapses? What should you do when you miss a car insurance payment? Today, we’re explaining everything you need to know about what to do when your car insurance lapses.
Table of Contents:
- What happens when my auto insurance lapses?
- Reasons for lapses in auto insurance coverage
- Penalties of a lapse in auto insurance
- How to fix a lapsed insurance policy
What Happens When My Auto Insurance Lapses?
A lapse in auto insurance means you are not currently covered by your insurance plan. This usually happens when you forget to make a payment or you forget to renew your policy when it expires. When your policy lapses, you are not legally allowed to drive on roads. You don’t have your state’s minimum required liability coverage.
Your auto insurance lapses from the moment your last insurance plan expired to the moment you get a new car insurance plan – or the moment your coverage is reinstated.
Reasons for Lapses in Auto Insurance Coverage
Some people lose auto insurance coverage when they miss an insurance payment. You might have let your car insurance expire, for example, and did not renew.
In general, there are four reasons why your auto insurance will lapse:
- You didn’t pay your premium (your monthly insurance payment)
- Your payment was late or is late
- You failed to renew your auto insurance plan after it expired
- You have excessive traffic violations or serious accidents
In all of the cases above, your insurance company might choose to drop you as a customer. Sometimes, you’ve caused so many accidents that you can no longer get insurance from a certain provider. In other cases, your insurance company will drop you as soon as you miss a payment.
Penalties of a Lapse in Auto Insurance
So you’ve let your car insurance lapse. Now what? The costs of an auto insurance lapse are severe. Obviously, it’s illegal to drive without insurance on all public roads in the United States. If you get pulled over while driving without insurance, then you could face penalties such as:
- Fines and fees
- Suspension of your driver’s license
- Increased insurance premiums
- Community service
- Imprisonment (in extreme cases)
These aren’t the only penalties you’ll face, however. When your car insurance lapses, your insurance company will likely notify your state’s DMV and explain that there’s a registered vehicle on the roads with no insurance. In this situation, the DMV might assess severe penalties for letting your car insurance lapse. The penalties vary between states but can include all of the following:
- Driver’s license suspension
- Vehicle registration suspension
- Fines and reinstatement fees
- SR-22 financial responsibility filing requirement
Some of the biggest penalties, however, occur when you cause an accident while driving with lapsed insurance coverage. If you cause an accident with lapsed insurance, you will be liable for all damages and injuries that occur. That means you’re personally responsible for paying medical bills, vehicle damages, and any other losses that occur as a result of the collision. Typically, insurance would cover these expenses – but you’re not insured.
Penalties for Car Insurance Lapses by State
- Click here to view a PDF of penalties for driving without insurance by state by the Consumer Federation of America.
How to Fix a Lapsed Insurance Policy
If you’ve let your insurance lapse and want to avoid penalties, what should you do? Luckily, you still have some options.
Option 1) Contact Your Current Insurance Company Immediately
Your first and best option is to contact your insurance company. You might have missed a payment or forgotten to renew your plan. In that case, an agent at your insurance company might be able to reinstate your policy without any penalty.
The shorter your lapse has been, the more likely you’ll be able to reinstate your policy without penalty. If it’s been 5 to 7 days, for example, then you should be okay. If it’s been several weeks, then you’re less likely to receive a penalty-free reinstatement.
Regardless of how long you’ve been without insurance coverage, you need to avoid driving until you reinstate your coverage. You can usually get a new proof of coverage card immediately through the insurer’s website or mobile app. Sometimes, you’ll need to wait for a new proof of insurance card in the mail.
Option 2) Shop Around for New Insurance
Alternatively, your insurance company might have avoided renewing your car insurance because of excessive traffic violations or at-fault accidents. This is called a non-renewal.
In other cases, your insurance company might double or triple the cost of your insurance after these violations, making it unaffordable for you to renew your policy. Although the insurer does not outright refuse to insure you, an outrageous renewal premium is essentially the same as a non-renewal.
If non-renewal is the reason your insurance lapsed, then now is the time to shop for a new insurance policy. Car insurance companies vary widely in terms of how they calculate risk. You might pay prohibitively high premiums at one insurance company while paying more affordable premiums at another insurance company.
Check out our list of the top 25 auto insurance companies in America to see which companies are worth considering after your non-renewal or insurance lapse.
Final Word on Car Insurance Lapses
An auto insurance policy can lapse for many reasons – including missed payments, excessive collisions or traffic violations, and failure to renew. When your insurance lapses, you can contact your insurance company to renew your plan. Or, you can shop around for new insurance.
Above all, remember to stay off the road until you have proof of insurance. In most cases, getting new proof of insurance coverage is instant, so even if your policy lapses, you will not need to be without coverage for very long.