Hopefully you will never be in this situation, but if you’ve lost your insurance due to non-payment, knowing what to do if your car insurance lapses can save you worry, aggravation and money.
How a Lapse Occurs
The reason your car insurance lapses is for non-payment of the amount due. How this typically happens is that the policyholder fails to make the required payment by the due date and still does not pay the amount due through the grace period. This grace period differs from one insurer to another, so pay close attention to the terms of your insurance policy to know what it is for your coverage. If you think you have two weeks to get in the payment, and the time limit is 10 days, you’ll have a lapsed policy.
Sometimes, scheduled payments are forgotten, or you could have changed from an automatic debit from your checking account to sending in payments – and then forgot. There are any number of reasons why you skipped your payment, but when your policy lapses, you aren’t covered for any losses. This is a potentially disastrous situation and one that you should remedy promptly.
What to Do Now
As soon as you are aware that your policy lapses, usually because you receive either a letter or an email notification from your insurer, get in touch with them right away to have your policy reinstated. This means they’ll resume your coverage, providing you make the appropriate payment, within the timetable they give you.
Many auto insurance providers find that it is in their best interest – and yours – to simply reinstate your previous policy. It’s less paperwork and time involved. But not every insurer will do this. The only way you’ll know is to call them and inquire how you can get your coverage back into effect.
Keep in mind that you’ll need to pay for the time that the policy lapsed, as well as make any additional payments required. You might want to consider having your scheduled payments automatically deducted or charged to a credit card to avoid having your policy lapse again in the future.
Suppose you can’t reinstate your old policy, or don’t want to pay the extra amount for the time it was lapsed? You may wish to, or be forced to, apply for a new policy. Be aware, however, that insurers will look at the fact that you had an instance of non-payment on your previous policy and that it lapsed. That sends up a caution flag. It isn’t that you can’t get insurance or even that your insurance coverage will cost more. It’s just something to keep in mind.
Insurance is Required
Bear in mind that you have to have your car insured in every state in the United States. The amounts of coverage you are required to carry depend on state law, so you should be aware of the minimums your state specifies by law.
Under no circumstances should you consider driving without insurance. You are not only putting your own financial situation at risk, since you will be liable for any injuries, fatalities, or damage that you caused (an at-fault accident), but you also won’t have the security of knowing you and your loved ones are protected in the event you are injured in a crash you cause, or that someone else causes who has no insurance.
One more point to keep in mind is that you could face suspension of your driver’s license and registration if you are caught driving without insurance.
Bottom line: If your car insurance lapses, take care of it immediately!