A car insurance lapse is a period of time when you have a registered car but you don’t have auto insurance coverage. A lapse in coverage can happen due to a missed payment that results in your policy cancellation. A car insurance policy lapse can lead to higher car insurance premiums and fines and a lack of protection in the event of an accident.

We all lead busy lives, and sometimes things just slip through the cracks. If that means letting your veggies go bad or forgetting to floss before bed (sorry, dentists), it just means you’re human. However, some slip-ups can have more serious consequences. In this post, we’ll explain what constitutes a lapse in car insurance, what the consequences could be, what to do if your auto insurance has already lapsed, what is a car insurance lapse grace period, and how you can avoid a lapse in the first place.

What is a car insurance lapse?

A lapse in car insurance coverage refers to any period (even as short as one day!) in which you own a registered car but don’t have car insurance. There is no one universal reason for a lapse in coverage. Maybe your policy simply ran out or you missed a payment and your policy was canceled as a result. Your coverage could lapse because you were deployed overseas, or you can’t drive for a period of time and assume you don’t need insurance.

What is a car insurance lapse grace period?

Car insurance companies are required by state law to provide notice (or a grace period) before cancelling your policy.  So, your car insurance will not be cancelled immediately if you miss a payment.  Depending on the state you live in, this grace period is usually between 10 and 20 days.  Your auto insurer will notify you by mail or email before cancelling your car insurance policy.

What happens if I miss a car insurance payment by a few days?

Most insurance companies offer a grace period for missed car insurance payments, so a payment that’s a few days late may be okay. Make your payment as soon as possible, as the car insurance grace period can vary depending on your insurer and state.

What happens if your car insurance coverage lapses?

Car insurance premiums may increase

If your car insurance lapses, you’ll almost certainly face higher insurance premiums later on since insurance company will consider you a higher risk to insure. While penalties vary by company, and some insurers don’t penalize customers for short lapses that fall in a grace period, many car insurance companies view customers with lapses as riskier than those without lapses. According to an analysis from CarInsurance.com, drivers whose coverage lapses for 30 days or less see their car insurance rates increase an average of 9%. For drivers whose coverage lapses between 30 and 60 days, that jumps to an average increase of 13%. Depending on your state, that number can climb as high as 48%. So, it is always best to make sure your car insurance policy is in good standing.

Are there other negative consequences from a car insurance lapse?

Unfortunately, yes! You cannot legally drive in any state without demonstrating financial responsibility for damages or liability in the event of an accident. In most states auto insurance is mandatory as proof of this responsibility. Virginia and New Hampshire are two notable exceptions. In these two states, drivers must either pay a DMV fee or file an application to legally drive without insurance. It’s also worth noting that both Virginia and New Hampshire are “at-fault” states. This means that in the case of an accident, the driver who caused it must cover a certain amount of the other driver’s medical and property costs.

State fees

Most states require a  minimum level of liability insurance for motor vehicles for all drivers; ignoring this requirement can lead to serious penalties. For example, in states such as Alabama, Arizona, Colorado, Hawaii, and Kentucky, the minimum first offense fine for driving without insurance is a hefty $500. In some states, including Alaska and Connecticut, your license can be immediately suspended.

SR-22 requirements

If you’re caught driving without the proper car insurance you may be required to carry an SR-22.  An SR-22 is a state-required certificate of financial responsibility. An SR-22 guarantees you are carrying at least the minimum amount of car insurance for your state and that you will be held financially responsible for any accidents. A variety of situations can incur an SR-22 insurance requirement, and none of them are good. They include:

  • A conviction for driving without insurance
  • Being involved in an accident while driving without insurance
  • Having to reinstate your license after it has been suspended or revoked
  • Multiple traffic offenses within a short period of time
  • Serious moving violations such as reckless or negligent driving
  • A DUI or DWI

An SR-22 is not only an inconvenience when getting car insurance, but it can add anywhere from $1,000 to $3,000 to your premium, depending on your state and the offense. Furthermore, an SR-22 requirement stays on your driving record from one to five years. That means you will need to pay much higher premiums for the entire period!

How do I get car insurance after my coverage has lapsed?

Once you realize your car insurance has lapsed, you should try to get it reinstated as soon as possible! As discussed above, lapses in coverage can have serious consequences. Don’t risk it — take quick action to remedy the situation. Follow the steps below to find a new car insurance after a lapse.

Step 1: Put it in park!

As soon as you realize your coverage has lapsed, do everything you can to avoid driving your vehicle. The last thing you want is to receive a ticket or get into an accident while driving without insurance. Ask a friend for a ride, take the bus, or use a rideshare app, but make sure to stay off the road!

Step 2: Call your insurance company

With luck your situation is as simple as a missed payment. If this is the case, and your coverage has only lapsed for a few days, your insurance company may be willing to cut you some slack if it falls with a grace period.

If your lapse has lasted longer than a week, your car insurance company will likely still reinstate you, but with a higher premium. If you’ve been without coverage for a month or more, you can expect a much higher rate and may even need to find a new car insurance company. Not all auto insurance companies are willing to reinstate customers who have had a long-term lapse. It’s in your best interest to talk to your insurance company as soon as possible.

This is also a good opportunity to explain the lapse to your insurance company. There are plenty of legitimate reasons for a longer-term lapse, including a move abroad, an extended trip, or a military deployment. Make sure your insurance company is aware of your specific situation so they can help you find the best rate possible for your insurance policy.

Step 3: After a car insurance lapse, shop around for a new policy

If your car insurance company is unable to give you a reasonable rate after a auto insurance lapse, don’t feel like you must settle. All insurance companies are different, and you may be able to find a better rate somewhere else.

Step 4: Look for insurance discounts

Whether you stick with your old insurer or find a new one, don’t be afraid to ask for discounts. Your company may offer discounts for anything from choosing paperless billing to passing a defensive driving course to a discount if you work from home.

Step 5: Keep checking in

Luckily a lapse in car insurance coverage won’t follow you forever. If you’ve made it several months with a clean driving record, check back in with insurance agent or your auto insurer and ask them to reevaluate your rates.

How can I avoid a car insurance lapse?

While the above steps are helpful if your auto insurance has already lapsed, it’s ideal to avoid a lapse in the first place. Even if you’re the forgetful type, the suggestions below can help set you up for success (and some serious savings).

Take advantage of grace periods

A car insurance grace period refers to the length of time you can put off paying your car insurance premium without having a lapse in coverage. Different companies have different car insurance grace periods though, some allow for a short grace period, so make sure to ask your insurer what their policy is in case of a missed payment.

Sign up for email reminders from your insurance company

These days, email and text messages are ubiquitous, and most of us check ours multiple times a day. So, what better way to keep on top of your car insurance company payments than signing up for your insurer’s email and/or text payment reminders? They are a convenient way to stay on track, and you get the satisfaction of deleting them once you’re done.

Consider putting your car insurance on autopay

If you’re worried about forgetting to pay, autopay is a great option to make sure your payments go through on time. Your payment will be automatically paid before the due date avoiding a missed payment entirely!

Keep your budget in mind

Always be realistic about your budget when signing up for car insurance. Getting coverage within your budget means you’ll be less likely to miss payments decreasing the likelihood of an insurance coverage lapse too. Lapses in car insurance coverage are never ideal, but nobody is perfect. We hope this blog will help you get back on track after a lapse and avoid future lapses altogether.

Get a quote with Elephant Insurance if you’re thinking of switching insurance providers, or log in to your online account to keep track of your insurance renewal so you never experience a lapse.

Article last updated on November 10th, 2024 at 5:42 pm