What happens if I let my car insurance policy lapse?
There can be consequences if you let your car insurance policy lapse. Letting your car insurance policy lapse could raise your rates, and driving without insurance is illegal in most states. Insurance costs an average of about $147 per month, but it could be much more if your car insurance coverage lapses.
Free Auto Insurance Comparison
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Kristen Gryglik
Licensed Insurance Agent
Kristen is a licensed insurance agent working in the greater Boston area. She has over 20 years of experience counseling individuals and businesses on which insurance policies best fit their needs and budgets. She knows everyone has their own unique needs and circumstances, and she is passionate about counseling others on which policy is right for them. Licensed in Massachusetts, New Hampshire,...
Licensed Insurance Agent
UPDATED: Feb 13, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.
UPDATED: Feb 13, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Letting your insurance lapse leaves you without protection in case of an accident, and you may have to pay thousands of dollars in repairs and medical expenses
- A lapse can also raise your rates or even lead to a repossession of your vehicle
- If your policy lapses, have it reinstated or start a new one as soon as possible
At least liability car insurance is required in most parts of the United States. If a police officer pulls you over and you don’t have valid proof of insurance, you could receive a hefty fine, a suspended driver’s license, or even jail time.
The average cost of car insurance in the U.S. is $147, and people who have let their policies lapse often have to pay even more.
What happens if you let your car insurance policy lapse? Read on for more information about the consequences of letting your car insurance policy lapse and what to do if it happens.
What happens if I let my car insurance policy lapse?
The consequences of letting your insurance policy lapse can be serious. So let’s look at a few potential outcomes.
Not Having Insurance
Car insurance requirements vary depending on the state, and you could face fines, license suspension, and even jail time for driving uninsured. If you don’t have insurance and have an accident with another driver, you could be responsible for all the repairs and medical expenses.
The other person could file a lawsuit, and in some states, they can get compensation for emotional pain and physical or mechanical damages. Defending yourself from a lawsuit can be a long, stressful experience.
If you know the other person, staying on good terms with them while arguing in court can be tough. Using insurance coverage can be much quicker and easier.
A Rate Increase
Even one day without car coverage can raise your insurance rates with some companies in some states. In other states, there’s a 10–20 day grace period before a company cancels a policy. This allows people to catch up if they’re behind on payments.
When possible, search for the best collision coverage car insurance companies and start new insurance policies before you cancel old ones. That way, you can avoid any lapses and ensure continuous coverage.
Repossession
Many banks and car dealers require full coverage car insurance for people with a loan or lease. This protects the lender from losses after an accident. However, if you let your insurance lapse, your car could be repossessed.
With some financial institutions, you may not have any warning that your vehicle will be repossessed. This can make finding out what happened to your vehicle and getting a new one difficult. A repossession can also harm your credit score.
Read more: How often should I review and update my car insurance coverage?
Are you looking for free insurance quotes?
Your one-stop online insurance guide. Get free quotes now!
Secured with SHA-256 Encryption
What should I do if my car insurance policy lapses?
If you realize that your policy has lapsed, call your insurance company as soon as possible. You may be able to get your policy reinstated quickly if it’s not canceled. If your car insurance is already canceled, start new insurance at the same or another company.
Remember that, with many organizations, you can get a discount for keeping the same policy for a long period. However, if you have to start a new policy, you’ll lose that discount, and you could have to pay higher rates.
Read More:
- What is the process for renewing my car insurance policy?
- Will your Car Insurance be cancelled after an accident?
Things to Remember About a Lapse in Your Car Insurance Coverage
If you’re at fault in an accident while uninsured, you may have to pay for your own expenses and the costs of the person you collided with. A lapse in your car insurance coverage could raise your rates as well.
Compare car insurance options carefully to choose a policy that allows reinstatement after a short lapse. That way, you can keep your rates low.
Case Studies: The Consequences of Allowing Your Car Insurance Policy to Lapse
Case Study 1: Financial Consequences
John is a car owner who let his car insurance policy lapse unintentionally. Due to financial constraints, he decided to delay renewing his policy.
In most jurisdictions, driving without insurance is illegal. If John gets caught without valid insurance coverage, he may face legal consequences, including fines, license suspension, or even imprisonment, depending on the severity of the offense.
Case Study 2: Loss of Vehicle Protection
Sarah, an occasional driver, accidentally allows her car insurance policy to lapse while she is away on vacation.
If Sarah’s car is involved in an accident or sustains damage due to theft, vandalism, or natural disasters during the period of lapsed coverage, she won’t receive any financial compensation from the insurance company. She will be responsible for covering all the repair or replacement costs out of pocket.
Case Study 3: Negative Impact on Insurance History
Mark, a new driver, lets his car insurance policy lapse due to lack of awareness about the renewal process.
Continuous coverage is considered a positive factor in determining insurance premiums. When Mark allows his policy to lapse, it creates a gap in his insurance history. This gap can result in higher premiums when he eventually obtains coverage again, as insurance providers may view him as a higher-risk driver.
It is essential to maintain continuous car insurance coverage to protect oneself from legal, financial, and personal risks associated with a lapsed policy.
Are you looking for free insurance quotes?
Your one-stop online insurance guide. Get free quotes now!
Secured with SHA-256 Encryption
Frequently Asked Questions
What if I don’t need car insurance?
If you’re going on an extended vacation or business trip and don’t plan to use your car, some companies will allow you to suspend your car insurance.
Since this isn’t a lapse, your rates shouldn’t increase when your policy is reinstated. However, you may need an affidavit from the DMV stating that you won’t use the vehicle while the insurance is suspended.
What can cause a car insurance lapse?
Causes of a lapse can include:
- Missed payments
- Late payments
- Forgetting to renew the policy after it expires
- Canceling a policy and not getting a new one right away
With many companies, setting up automatic payments can help you avoid a lapse and get a discount on your rates.
How long will a lapse stay on my record?
In most states, a lapse in car insurance coverage will stay on your record for three years, and you’ll have to pay higher rates.
Are you looking for free insurance quotes?
Your one-stop online insurance guide. Get free quotes now!
Secured with SHA-256 Encryption
Kristen Gryglik
Licensed Insurance Agent
Kristen is a licensed insurance agent working in the greater Boston area. She has over 20 years of experience counseling individuals and businesses on which insurance policies best fit their needs and budgets. She knows everyone has their own unique needs and circumstances, and she is passionate about counseling others on which policy is right for them. Licensed in Massachusetts, New Hampshire,...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.