What Happens if Auto Insurance Lapses?

Auto insurance is often a requirement under state laws. Many financing and leasing companies require drivers to maintain car insurance as well. However, there are situations in which your coverage may lapse. The most common reason for this is simply not making the required payment. If this happens to you, take action right away to get a new car insurance policy in place to avoid risks of penalties for driving without coverage.

Uncovered Drivers are High Risks

Those who do not have car insurance due to a lapse in coverage are considered a higher risk to the insurer than those who have maintained coverage throughout that time period. Even if you just forgot to make a payment, chances are good this could still increase the amount of risk insurance companies perceive in you. Even a single day of no coverage is likely to lead to higher costs as a direct consequence.

Don't Drive Without Coverage

If your policy has lapsed, call an agent or obtain a car insurance policy right away. Do not drive without coverage. Doing so could put you at risk of costly penalties later, and it also puts every driver on the road with you at risk. Of course, it is also illegal in most states. In most cases, auto insurance companies can get you into a policy the same day, getting you back to being covered fast.

Leases and Loans

In many situations, insurance companies are required under contract or law to notify the lien holder on a car that you are driving if the coverage for it lapses. For example, perhaps you are leasing a vehicle. You forget to make a payment and the coverage ends. The auto insurance company will tell the leaseholder about this, and they can immediately start the repossession process because of the risk involved.

If your policy is not in effect right now, get it back in line as soon as possible. Be sure to tell your car insurance company what happened and why. And over time, making payments promptly can help to bring your rates back down to a lower level. Most importantly, work with an agency that's willing to give you another chance.