What Happens if My Car Insurance Lapses?

Lucy Lazarony
May 21, 2020

Mistakes happen and so do lapses in car insurance policies. Just what is a lapse in insurance? A lapse in car insurance occurs any time you have a car registered in your name but you do not have car insurance coverage. How did this happen? Your policy may have run out or it was cancelled because you missed payments.

Having a lapse in car insurance is a pretty serious situation since car insurance is necessary for driving a car in the United States. A lapse in car insurance may also cause your insurance rate to spike.

What Happens if Car Insurance Lapses?

If your auto policy should lapse your auto insurance company is not obligated to cover any auto claims. This means you will have to pay out of your own pockets for accidents or damage to you, your car and others and other property. This includes medical bills for yourself and the other driver, damage to the other vehicle and any repairs for your own car.

How Long Can Your Car Insurance Lapse?

It depends on your auto insurance company and how quickly they would move to cancel the policy altogether. After that, your lapse in insurance will continue until you apply for, are approved, and pay for a new policy.

What Is a Car Insurance Lapse Grace Period?

Some auto insurance policies come with grace periods of three days and other companies give you up to 30 days to get current on your car insurance payments. In addition, an auto insurance company may offer a short grace period with no late fee or a long grace period but with a late fee attached. Review the details of your policy carefully. And reach out as soon as possible when you become late on your auto insurance payment. Getting your policy current during the grace period is ideal.

What Happens with an Insurance Lapse on a Financed Car?

If your auto insurance policy lapses on a financed car, the lien holder could repossess the car or purchase a new insurance policy for the car with higher rates.

How can this be? If you drop auto insurance from a financed car it is a violation of your finance contract and it may put your car loan in jeopardy. Check the specifics of your auto loan before allowing your car insurance to lapse. Do everything you can to get your car insurance current again as soon as possible.

What Happens with a One-day Lapse in Car Insurance?

Even just a one-day lapse in your auto insurance can result in a higher insurance rate. The cost of getting a new policy is usually more expensive than staying with one, continuous policy. So get your car insurance current as soon as you can. And do your best to pay on time with your payments going forward.

Getting Car Insurance After a Lapse in Coverage

After a lapse in car insurance coverage, you likely will pay a higher rate on a new insurance policy for your car. And you will want to shop around for the best policy you can find.

But start if you can with your current car insurance company. Is there a way for you to catch up on your payments, especially if you are just a few days behind or in the policy’s grace period? Getting your car current with your current auto insurance company is the best resolution to a lapsed policy. You don’t have to pay too much for solid coverage. Just compare what rates are available to you by entering your zip code at the bottom of the page.

What Is a Car Insurance Lapse Fine?

Once your auto insurance policy is no longer in effect, your auto insurance company will notify the DMV and alert them that your car is uninsured. Depending on where you live, being uninsured with your car can lead to car insurance lapse fees, fines and penalties. Whatever the fees, fines or penalties in your state, you will want to pay them as soon as possible.

What Is an Insurance-Lapsed Car Accident?

This is the worst case scenario to driving with lapsed car insurance, having an accident and having the accident be your fault. You will need to pay for damages to your car and the other driver’s vehicle. You will also need to pay for any damage to property and you will need to pay medical bills for yourself and the other driver. The costs of this accident would be a nightmare scenario for most drivers to pay out-of-pocket, yet another reason to get a lapsed insurance policy paid up as soon as you can.

Getting Car Insurance After a Lapse

After a lapse in car insurance you can reach out to your current company and ask to be reinstated, if you have the money that you owe the company. You may or may not be able to reinstate your policy.

Or you can shop around for new auto insurance on your own. The more you shop around the better your chances of landing a better deal. Be aware that you will be paying more for auto insurance now that you have a lapsed policy on your record. But you may find a company that will charge you less than others. And that’s the company for you following a car insurance lapse.

Get a Free Auto Insurance Quote Online Now.

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