Does a lapse in coverage affect your car insurance rates?

Maintaining continuous auto coverage can help you save money on premiums. You may, however, find yourself in a situation where your car insurance has expired. Correcting a lapse in car insurance as soon as possible can provide you with peace of mind and financial protection in the event of an accident. Car insurance coverage gaps are frequently unintentional. If you find yourself in a situation where your car insurance has expired, there are steps you can take to regain coverage.

What is a lapse in insurance?

When you fail to pay your premiums, your insurer cancels your policy, or you switch between two policies and cancel your existing coverage before your new policy takes effect, you have a lapse in insurance coverage. Depending on your circumstances, an insurance lapse can last as little as a day or as long as a year.

Regardless, avoiding a car insurance lapse can save you a lot of trouble. If you are involved in a car accident and do not have car insurance, you may be responsible for paying damages and medical bills out of your own pocket. If your insurance coverage lapses and you own a vehicle, you may face fines or other penalties, such as the suspension of your driver's license or increased expenses from your lienholder.

If you do not own a car, you may believe that you do not require insurance. However, keep in mind that if you drive at all, car insurance can help you pay for the costs associated with a car accident. Non-owner car insurance, for example, protects your finances while you're driving. Many major insurers offer this low-cost option, which can help you avoid a lapse. It could be a good option, for example, if you sell your car and want to take your time finding a new one.

How a lapse in coverage affects car insurance rates

If you have a lapse in coverage, your car insurance company may perceive you as a higher-risk driver - and may charge you more as a result. Policyholders with lapsed auto insurance pay an average of $602 per year for minimum coverage auto insurance, nearly $60 more than the national average. Those with full coverage pay an average of $1,949 per year, which is nearly $200 more than the national average.

Average annual minimum coverage premium for a lapse in coverage

Average annual full coverage premium for a lapse in coverage

Those who have gaps in their insurance typically pay around 10% more for their coverage. It's also possible that your insurer will refuse to renew your coverage after a lapse. You would have to find a new policy with a new carrier in this case. Because your insurer is required to report your lapse to the DMV in your state, any new insurer will be aware of it and may charge you higher premiums as a result.

What to do if you have a lapse in coverage

The first thing to understand about having a lapse is that dealing with it right away can give you peace of mind and help you achieve your goals. Your car insurance company may even offer a brief grace period during which your premiums for lapsed coverage will not be increased.

When you realize your policy has expired, take the following steps to get back on track:

• Contact your insurance company. It's best to check with your insurer to see if there has been a lapse or if you are simply past due on your payments. You might be able to avoid a lapse by paying your overdue payment over the phone.
• Many insurance companies provide a grace period. This grace period is typically a period of time during which your premiums will not increase due to a lapse in coverage. You should check with your insurer to see if you qualify for this option.
• Create a new policy. If you are unable to reinstate your policy, you should begin looking for a new insurance policy as soon as possible.
• Avoid driving. You should probably avoid driving and look for alternate modes of transportation until you have successfully obtained a new insurance policy during a lapse period. In addition to the risk of having to pay for an accident out of pocket, driving without proper insurance may result in a suspended license and the need to obtain an SR-22.

Cheap car insurance companies after a lapse in coverage

Even if your premiums rise as a result of a lapse, you may still be able to find an affordable policy. StrongInsurance editorial team has exclusive access to Quadrant Information Services rate data, and based on our extensive research, USAA, Geico, and Travelers may be the cheapest car insurance companies after a lapse in coverage.

Even after a lapse, many of the cheapest car insurance companies offer annual premiums that are lower than the national average, as shown in the tables below. However, keep in mind that the amount you pay for car insurance may vary depending on other rating factors, such as your location and the type of vehicle you drive.

Cheapest minimum coverage car insurance after a lapse in coverage

Cheapest full coverage car insurance after a lapse in coverage

How to prevent a lapse in car insurance coverage

It's best to avoid lapses if you know they're possible. For example, if you intend to be out of the country for an extended period of time, notify your employer. If your car will be in storage, you may be able to switch to a simple policy with only comprehensive coverage while you're gone, which will keep your coverage and offer a lower premium.

Set up a system to remind yourself when your premium is due to avoid unexpected lapses. If you are switching from one policy to another, you should double-check that there is no time between the end of the old policy and the start of the new one.

If you intend to stop driving entirely, you must notify your insurance company and cancel your policy. You should also contact your DMV to see if there are any state requirements you must complete first, such as returning your license or canceling your registration. Many states allow you to keep your license as identification, while others provide non-driver licenses that can be used in the same way.

How to maintain auto coverage

Don't give up if you're struggling financially and finding it difficult to pay your insurance premiums. Here are a few ideas for lowering your insurance costs and making your coverage more affordable:

• Get several quotes. You may be surprised by the premium differences between insurers. Comparing car insurance quotes from various providers can help you find the best deal. Of course, you have to be careful because of the fact that you have to be careful because of the fact that you have to be cautious.
• Consider lowering your policy's coverage limits. Each state has a minimum liability requirement, but if you're paying for more coverage than that, you can lower your limits and lower your premiums. If you decide to reduce your coverage limits, keep in mind that doing so exposes you to additional financial risk.
• Look for discounts. Most major insurers provide a number of discounts, some of which are simple to obtain. Many insurers, for example, offer discounts for paying premiums online or setting up recurring payments. These discounts should help you save money on your insurance. Consider enrolling in a usage-based telematics programme, which can usually provide significant savings in exchange for safe driving habits.
• Reconsider your coverage options: If your coverage overlaps with other products, you may be able to adjust your auto insurance coverage. For example, if you already have roadside assistance coverage elsewhere, it may be worthwhile to remove it from your policy. However, it is critical to consult with a licensed agent beforehand to avoid any unexpected gaps in coverage.