What to do When my Car Insurance Lapses

In this bleak economy, many people are experiencing financial struggles like never before. The result on the average American is unpaid bills, including car insurance.  Learn more from our guide regarding what to do if you experience a lapse in auto insurance coverage.

Short-Term Lapse: Is Reinstatement an Option for me?

The amount of time a driver goes without being covered by an insurance policy determines their options. For instance, drivers who have gone without coverage for just a few days are often reinstated by their insurance company. If the lapse has been longer than a few days, it is still possible to request a reinstatement from your former insurance company. However, they may deny coverage because of the increased risk and you may be required to search for a new insurance company.

If you realize that your auto insurance policy has lapsed recently (in the past few days), you will need to contact your insurance company, right away. The insurer may decide to reinstate your policy after the bill has been paid. The majority of companies understand that a lapse in payment, can happen and they will most likely extend coverage to you again. While the insurance provider is not required to provide coverage; customers who have been insured through their company for a long period of time will stand a better chance of getting reinstated.

Insurance Reinstatement Options

Insurance companies have different procedures for getting reinstated after a lapse, so you will need to ask the insurance company if you can simply renew the previous policy or if you will be required to reapply for a new policy.

The insurance company may discuss your payment options, if not you may want to ask. Credit card or online banking are probably the best options for paying your premium and getting coverage back, fast.

After a Lapse: Searching for a New Insurance Company

While hard times can happen, having a lapse in coverage does not necessarily appeal to insurance companies, but it is still possible to get the insurance required by law. If the former insurance company will not insure you, you will have to shop around for coverage. Every insurer uses a different rating system when considering insurance applicants, therefore, it is possible to find an insurance company that does not place you in a high risk category just because you had a lapse in coverage. If the lapse was long and you are now considered a high-risk driver, it may be in your best interest to search for companies that specialize in providing coverage to high-risk drivers. However, the premiums for high-risk drivers are usually higher.

Auto Insurance Lapse: The Consequences

In the time when the policy has expired and until the date when your policy has been officially reinstated — you are not covered. So, the insurance company will not only deny payment for any damages, injuries or deaths caused by the uninsured driver, but in most states (except New Hampshire and Washington where liability coverage is not required) you will face legal consequences including, paying court costs and fines, losing your license or even facing jail time), if caught without auto insurance.

All insurance companies are required to notify the DMV in your state whenever you experience a lapse in coverage. After being notified, the Department of Motor Vehicles in your state will send a form to uninsured motorists asking for information about the lapse and the driver’s proof of insurance within the stated time limit. In some states (such as New York), not supplying the required information in the time frame requested by the DMV will result in being forced to turn in your plates. 

As always, when shopping for a new insurance company it helps to compare several different coverage plans and the rates at various companies to find the cheapest plan that fits your auto insurance needs. A lapse in auto insurance can happen, but it helps to know ahead of time, what you should do if this happens to you.

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