When your car insurance lapses because perhaps you forgot to renew it, you need to take immediate action. Every state requires drivers to carry a certain amount of auto insurance while they own the vehicle. Here’s what you need to do if your car insurance policy lapses.
What’s a Coverage Lapse?
Your car insurance coverage can lapse for various reasons beyond forgetting to pay on time. If you encounter too many violations or accidents, your insurer may decide not to renew your policy. The insurer may also cancel the policy if it makes an underwriting request that generates no response. Regardless of why your car insurance has lapsed, you need immediate coverage to avoid state penalties. Insurance companies define a coverage lapse as no coverage for 30 to 60 days.
Consequences of Failing to Resolve a Payment Lapse
In some states, you can wind up in jail and will have to pay harsh fines for driving without proper car insurance coverage. If you lease or finance the vehicle, it could lead to the titleholder repossessing the vehicle. Stricter states impose multiple penalties, which might include license or registration suspension. Some states, such as Massachusetts and Nebraska, impose reinstatement penalties of about $500.
Once the insurance agency cancels your coverage lapses and your policy, it will become difficult to find a new insurance plan at the rate you were paying. You can expect to pay significantly more due to insurance agencies viewing you as a higher risk to their business.
Many insurance agencies are part of a network dialed into a database that tracks the insurance histories of individual drivers. Once the system tags you as high risk for allowing a payment lapse, many insurers will automatically offer a higher rate. The most drastic rate increases can be as much as 50 percent.
Prevent Your Policy from Cancelation
It’s crucial to contact your insurance company immediately when your car insurance lapses. Let them know your situation, such as if you are unable to pay on time. Some insurance companies offer a degree of flexibility, but usually, paying late means paying more. The sooner you address the issue, the less likely you’ll pay a large penalty.
It pays to shop around to get the best car insurance rates, but your options may be limited if your coverage has run out. Your priority should be to get new coverage as soon as possible. Penalties can increase the longer you wait. An exception in which an insurance lapse may not matter is when you sell your vehicle and decide not to continue driving. However, as long as the vehicle is registered in your name, you may be required by the state to maintain coverage.
Cover Your Car with Scautub
Once you establish car insurance, make sure you keep up with the monthly payments. The first lapse might not be treated as serious by the insurer, but further lapses will send red flags about you, not just to your insurer but to the insurance industry. If you want more information on your car insurance, contact us at Scautub Agency, and we will help you find the right coverage.