How Does a Lapse in Car Insurance Coverage Affect Rates?

Posted July 3rd, 2017 by Alexa Goyette

Neglecting to pay your heating or electricity bills results in automatic results, requiring blankets and candlelight. Maybe you think that putting off paying your auto insurance can’t do much harm, as these bills don’t pay for a tangible day-to-day necessity. Actually, not paying your car insurance on time could result in some serious trouble for you and your bank account.

A lapse in your car insurance policy often labels you as a risky driver in the eyes of insurance providers. Since risky drivers are considered more likely to get into a car accident, your rates will increase.

How do you avoid these increases? The best way to ensure you’re getting the best rate on your car insurance is to make your payments in a timely manner and to keep track of when you need to renew your policy. In the long run, avoiding these gaps could save you hundreds.

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What is a lapse?

A lapse in your car insurance is the time in which you have a registered vehicle but do not have car insurance. Maybe you moved to a city and rely on public transportation rather than driving, or you were deployed or moved abroad. Or perhaps your policy ran out or was cancelled.

If you are moving abroad or getting deployed…

A few insurance companies allow people in the military to suspend their insurance policy while they’re away without raising their rates. If you’re moving abroad, you need to get an affidavit from the DMV stating that you won’t be driving your vehicle and therefore won’t need insurance coverage. If your insurance company doesn’t allow you to suspend your insurance, you’ll need to either cancel your insurance or remove yourself from your policy; this won’t exempt you from raised rates in the future. In order to avoid penalties from the DMV, you’ll need to fill out an exemption form.

If you missed a payment or didn’t renew your insurance policy…

This is the most common instance in which a lapse occurs. Your insurance company will reach out to the DMV to tell them you are not covered by their insurance anymore; this will open you up to fines and penalties. If this happens to you, try to renew your policy as soon as possible, as your rates will get higher the longer you wait.

If you find out that your policy expired, make sure you contact your provider immediately. Insurance companies understand that accidents happen and it’s easy to lose track of dates. An agent might be able to renew your policy without a penalty if it’s only been a few days. Act quickly, though, as waiting a long time may make you unable to reinstate your policy and may result in substantial increases in rates.

What should you do?

If you need to drive, you need to get back on a car insurance as soon as possible, as driving without insurance can be much more costly than regular insurance rates would be. In order to afford insurance, you might want to rethink your insurance coverage policy. Getting car insurance quotes will guarantee you the lowest possible rate for your lifestyle. Rather than going off an insurance plan altogether, it’s much safer and more cost-effective to find a new policy with lower insurance rates. Your rates will increase, as you most likely have been deemed a risky driver.

How exactly does your state’s DMV penalize these lapses?

Every state has a different penalty for you when they find out about the lapse in your insurance policy. Some common penalties for insurance lapses include suspensions of your driver’s license and vehicle registration, fines and a SR-22 financial responsibility filing requirement. In New York, for instance, you can pay a civil penalty and remove your suspension if your insurance lapse is for 90 days or less; this penalty increases as the amount of time in your insurance lapse increases. Some states aren’t quite as lenient.

The rule of thumb is to make sure you stay accountable for your payments and aware of your policy’s expiration date. Driving without insurance can result in a ticket or arrest, not to mention the massive costs you’d pay if you get into an accident without insurance. If you do miss a payment or forget your renewal date, don’t panic. The best thing you can do if you have a lapse in your insurance is to shop around for a new policy to find the best rates despite the increase you’ll experience as a risky driver.