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How to get car insurance after a lapse in coverage
Restore confidence by renewing coverage right away and taking safety precautions.
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Even first-time offenders might see a hike in rates because of a lapse in car insurance. The lapse suggests lack of responsibility around driving. 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 my car insurance?
A car insurance lapse happens when you fail to pay or renew coverage and your policy expires or gets canceled. But your policy doesn’t turn null and void right away. Consider these situations that may happen directly after a lapse:
- Grace periods grant you extra time. Most states have time limits your insurance company must let pass by before it can cancel your policy. The grace period ranges between 10 and 20 days, depending on your state. However, it may get extended in times of crisis.
- You might need to file an SR-22. Most states have legal penalties for lapsed coverage, such as filing an SR-22 form to prove you have insurance. Insurance companies may also deem you high risk if you receive a ticket or violation.
- You might have broken your car loan contract. If you financed your car, your lender will get notified about the policy lapse around the same time as you. Your lender then has the legal right to buy another insurance policy for you or even recover your car. A force-placed policy tends to have less coverage for an expensive premium.
What about a one-day lapse?
If you missed your car insurance payment by one day, your coverage likely 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 long does a lapse in car insurance 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.
How do I update car insurance after a lapse in coverage?
To make amends with your car insurance company and reinstate coverage, you can follow a few steps:
- Call your insurer right away. Your insurance company might let you reinstate your old policy without a lapse if you call right after you miss the payment or renewal. But you need your account up to date on payments before getting reinstated.
- Get a new policy. If you’re looking for a new policy, you can look at the value and coverage from several insurance providers. Since you’re considered a higher risk, this could help you save money in the long run.
- Update your lender about your insurance. For financed cars, you should call your lender or leasing company to stop the lender-placed policy and work out any other issues. You may have to pay the outstanding premium for your forced policy.
- Show proof of insurance. If you’ve been placed on a forced-placed policy, gather proof of insurance and send it to your lender or leasing company. Also, you may be required to send an SR-22 document to your Department of Motor Vehicles to prove insurance. Some insurance companies send this for you at an extra charge.
- Set up reminders. Last, take precautions to avoid a future lapse. You can set up calendar reminders, automatic payments or automatic renewals.
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How much does a lapse affect car insurance rates?
Lapsed insurance coverage could significantly hike up your rates. But the amount of time lapsed between your previous and new policies can make a difference.
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 forced-placed policy, or even car repossession.
- Driving uninsured. Car insurance companies may automatically consider you a higher risk after a lapse because of the possibility you were driving uninsured. This behavior could mean more risky driving in your future.
- Getting into an accident. Driving uninsured could mean paying hefty sums out of pocket after an accident because you didn’t have insurance to pay for damage. That includes your car and the other driver’s.
How do I get cheap car insurance after a lapse?
A break in coverage doesn’t have to break the bank, but your best defense is to show that you’ve learned your lesson. In the meantime, 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.
- Look for discounts. Keep your eyes peeled for new discounts you might qualify for, such as military or low-mileage driving.
- Take a safety course. Taking a driver safety course could earn you a discount and remind you of safe habits on the road.
- 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.
- Keep your driving record clean. No matter what your past looks like, instill confidence and lower rates by driving safely from here on out.
- Sign up for automatic renewal. Take precautions to prevent lapsed coverage from happening again.
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How can I avoid a lapse in car insurance?
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 car insurance policies
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.
- 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 serious 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.
Common questions about car insurance after a lapse
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