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What Happens If My Auto Insurance Lapses?

Auto Insurance Lapses

Have you ever been in a situation where you forget to pay your auto insurance premium on time, and suddenly you realize that your policy has lapsed? It can be a stressful experience. You’re not alone, this happens more frequently than you think. Let’s take a look at what happens if your auto insurance lapses, what consequences there may be, and what steps you can take to get back on track.

What is an auto insurance lapse?

First, let’s understand what it means when we say that an auto insurance policy has lapsed. A policy lapses when the policyholder fails to pay the insurance premium on time, and the policy cancels. As a result, the policyholder no longer has insurance coverage because the policy has lapsed. This is called a cancellation for non-payment of premium. It’s very different from when you intentionally cancel your auto insurance.

What Happens When Your Auto Insurance Lapses?

Driving without valid auto insurance coverage is illegal, and it can have severe consequences. Here are some things that could happen if your auto insurance policy lapses:

  • You Could Face Legal Penalties:

    Auto insurance is required in most states. If you are caught driving without valid auto insurance coverage, you could face legal penalties. The exact penalty varies depending on the state you live in, but you could be fined or have your driver’s license suspended. Additionally, you could be required to carry an SR-22 for several years.

  • You Could Be Held Liable for Damages:

    When you’re auto insurance lapses, the biggest issue is that you’re now driving without coverage. Therefore, if you are involved in an accident, and are liable for the other party’s damages, you will have to pay out-of-pocket. Paying for a vehicle’s damages, medical bills, and other related expenses can have devastating financial consequences.

  • You Could Lose Your Vehicle Registration and License Plates:

    In some states, driving without valid auto insurance coverage can result in the revocation of your vehicle registration and license plates. This means that you would not be able to legally drive your vehicle until you obtain valid auto insurance coverage.

  • Your rates could go up:

    If your auto insurance policy lapses, it could make your next policy more expensive. Auto insurance companies consider policyholders with lapses in coverage as high-risk drivers, and they may charge higher premiums or decline coverage altogether.

How to Avoid an Auto Insurance Lapse?

Now that you know the potential consequences of an auto insurance lapse, it’s essential to take steps to avoid it from happening. Here are some tips to help you keep your auto insurance policy in good standing:

  • Set Up Automatic Payments:

    Most insurance companies offer automatic payment options, which can help ensure that you never miss a payment. Set up automatic payments using your credit card or bank account to avoid an auto insurance lapse.

  • Mark Your Calendar:

    If you prefer to make manual payments, be sure to mark your calendar with the due dates to avoid missing any payments.

  • Renew Your Policy in Advance:

    Renew your policy before it expires to avoid any potential lapses in coverage. Contact your insurer in advance to learn about the renewal process and ensure that you have adequate coverage for your needs.

  • Maintain a Good Driving Record:

    Maintaining a good driving record can help keep your auto insurance premiums low and prevent your policy from lapsing. Avoid traffic violations, accidents, and other driving infractions that could result in a rate increase or policy cancellation.

  • Review Your Policy Regularly:

    Review your policy regularly to ensure that it still meets your needs. If you’ve made any significant changes to your vehicle or driving habits, it’s essential to update your policy accordingly.

  • Consider Bundling Your Policies:

    Many insurance companies offer auto insurance discounts for customers who bundle their policies. Consider bundling your auto insurance policy with your home, renters, or other insurance policies to save money and simplify your coverage.

The bottom line

Letting your auto insurance policy lapse can have severe consequences, including legal penalties, financial liabilities, and more expensive coverage in the future. It’s essential to take steps to avoid an auto insurance lapse by setting up automatic payments, marking your calendar, renewing your policy in advance, maintaining a good driving record, reviewing your policy regularly, and bundling your policies.

If your auto insurance policy has lapsed, contact your insurance agent as soon as possible to reinstate your coverage. If you don’t have an agent, contact us, or start a quote online.

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