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How to get car insurance after a lapse in coverage
Make amends by renewing your coverage and paying any penalties for going uninsured.
Even a first-time lapse in coverage can lead to a hike in car insurance rates, legal fines and filing extra paperwork with the DMV. That’s because insurers view driving uninsured as risky behavior, which marks you as a higher-risk driver. However, you can soften the blow by regaining coverage as soon as possible and setting up automatic payments to avoid future lapses.
What happens after a lapse in coverage?
A car insurance lapse is a gap of time when you fail to pay for or renew your policy and it expires or gets canceled. At this point, you’re uninsured and could get steep penalties for driving or pay for car accident damage out of your own wallet. However, your policy doesn’t turn null and void right away.
Consider these situations that may happen directly after a lapse:
- Grace periods. Most states have time limits before your insurance company can cancel your policy. The grace period typically lasts for 10 to 20 days, but it may get extended in times of crisis.
- Filing an SR-22. Most states also have penalties for lapses, such as filing a form called an SR-22 to prove you have insurance.
- Your car loan contract. If you financed your car, your lender is notified about the lapse in coverage around the same time as you. Your lender has the legal right to buy another insurance policy for you, called a forced-placed policy, or take back your car.
What about a one-day lapse?
If you missed your car insurance payment by one day, your coverage probably hasn’t lapsed yet. Your state’s grace period before the policy cancels should go past one day.
But if you miss the grace period even by one day, you could see higher insurance rates when you reinstate coverage.
How to update car insurance after a lapse in coverage
To reinstate coverage, you’ll have to make amends with your car insurance company or find a new one:
- Call your insurer right away. Your insurance company might reinstate your old policy without a lapse if you call right after you miss the payment — but your payments must be up to date.
- Get a new policy. If you’re looking for a new policy, look at the value and coverage from several companies that specialize in or allow high-risk drivers.
- Contact your lender. Call your lender or leasing company to stop the forced-placed policy and work out any other issues. You may have to gather proof of insurance and pay an expensive premium before removing the forced policy.
- File proof of insurance. You may be required to send an SR-22 document to your Department of Motor Vehicles to prove insurance. Some insurance companies file the form for you at an extra charge.
- Set up reminders. You can set up calendar reminders, automatic payments or automatic renewals to avoid a future lapse.
How to get cheap auto insurance after a lapse
A break in coverage doesn’t have to break the bank, but your best defense is to set safeguards to avoid it happening again. Look for savings by combining several of the following:
- Shop around. Some companies may extend extra grace or view your risk different from another insurer. Also, you might consider one that specializes in high-risk policies if you have trouble finding a company to cover you.
- Review your coverage. Now’s a good time to review your coverage and drop anything you don’t need. If you drive an older car that you could easily pay to replace, consider liability-only coverage.
- Take a safety course. Taking a driver safety course could earn you a discount and remind you of safe habits on the road.
- Look for discounts. Keep your eyes peeled for new discounts you might qualify for, such as military or low-mileage driving.
- Consider telematics. If you’re a safe driver already, consider signing up for a telematics policy. It tracks your driving habits and factors risk accordingly.
- Sign up for automatic renewal. Take precautions to prevent lapsed coverage from happening again.
How much does a lapse affect car insurance rates?
Lapsed insurance coverage significantly hikes up your rates because insurance companies consider you a higher risk to insure. The amount of time that elapsed between your insurance policies can make a difference.
Other factors that might influence the new rate:
- Incurring state penalties. Nearly every state has fines or license penalties for driving without insurance. So you might have to pay legal consequences on top of car insurance surcharges if you’re caught without insurance.
- Breaching your loan or lease contract. Because your car loan or lease probably requires full coverage, you may deal with an expensive force-placed policy, or even car repossession.
- Driving uninsured. Car insurance companies consider you a higher risk after a lapse because it’s possible that you were driving uninsured.
- Getting in an accident. Driving uninsured could mean paying hefty sums out of pocket after an accident because you didn’t have insurance to pay for the damage. That includes your car and the other driver’s.
How long does a lapse stay on record?
This depends on the ticket or violation you receive for driving without insurance. Different states have different levels of penalties. For example, you’ll receive a license suspension in New York for going uninsured. This could result in the suspension and SR-22 requirement staying on record for about three years.
Compare car insurance after a lapse in coverage
How can I avoid a lapse in coverage?
If you just noticed the gap in your car’s coverage or if you can’t make an upcoming payment, you can take steps to avoid the dreaded lapse on your record. Try these:
- Reinstate your coverage right away. As mentioned above, car insurance companies offer grace if you call your insurer quickly. You can make the payment and restore your account without stamping a lapse on your record.
- Negotiate your payment. Let’s say you know you can’t pay your next monthly premium. Before letting your coverage lapse, you could let your insurance company up front. An agent may extend your due date, lower the bill or explore other available options.
- Drop down to state minimums. If you can’t handle the cost, you could drop all unnecessary coverage. Most states only require a moderate amount of liability coverage, while a few require other coverage like personal injury protection. While insurance agents might recommend this low coverage only when facing a financial dilemma, it at least keeps you legal on the roads.
- Buy a storage policy. Another last resort, a storage policy offers minimal coverage while you keep your car in storage, such as your garage. The policy is also called layup or comprehensive-only coverage. It protects your car from theft, vandalism or weather damage, but does not meet state requirements for driving legally. Some companies require you to store your car for at least 30 days. For legal reasons, you might have to cancel your car’s registration with your Department of Motor Vehicles. Be sure to ask about local laws for storing an unregistered, uninsured car.
Common reasons for lapsed coverage
If you received a cancellation notice due to a lapse, you could have caused the issue or it might have been sent out by mistake. Reasons you might face a coverage lapse:
- You didn’t pay the bill. Your insurer could cancel coverage and peg you as an increased risk, even if it’s one day after your renewal date.
- You’re going overseas. You may need to get insurance in a different country or suspend coverage to avoid a lapse. Talk with your insurer about your options for suspending or dropping optional coverage while you’re out of the country or being deployed for military duty.
- You’re not driving anymore. Depending on the situation, you may have several options that don’t involve canceling your policy.
- You’re driving uninsured. Choosing to drive without insurance has legal consequences and could leave you and others on the road financially strapped after an accident.
- Your insurer made a mistake. Maybe you let your insurer know you wouldn’t be renewing and something got lost in translation.
- You switched cars. Maybe your old car died unexpectedly and you were still shopping for a new one when your insurance lapsed. Even if you weren’t driving, failing to notify your insurer could put a mark on your record.
Bottom line
Having a lapse in coverage could break trust with your insurer, leading to higher rates. However, know that insurers do look at the full picture — including recent accidents, a history of lapses and the number of days you’ve gone without insurance currently.
Compare insurance providers to make sure you’re getting the best value, especially after a coverage lapse.
