Personal Insurance

Think a Lapse in Auto Coverage Doesn’t Matter? Think Again.

lapse in auto coverage

Contributing Leavitt Group Authors: Yessy Arroyos, Mary Kay Hale

Consider this scenario: John recently skipped a couple of payments on his auto insurance. What can happen?

  1. John’s insurance could be cancelled for nonpayment, leaving him without coverage.
  2. If John is involved in a car accident during this time, he won’t have coverage for any resulting injuries or damages and could be sued if he is at fault.
  3. John may have to restart his insurance and pay another down payment, plus any earned premium on the cancelled policy.
  4. The state will be notified that John’s coverage is cancelled. His vehicle registration could be suspended, leaving him to owe a reinstatement fee. If John is caught driving without insurance, he could face stiff penalties.
  5. John may not qualify for a preferred/standard company, especially if the lapse is over 30 days.
  6. John’s insurance rates will be higher because he will no longer qualify for any renewal credits/continuous coverage discounts.

If you find yourself in a temporary financial emergency and are unable to make your insurance payment, contact your agent about the possibility of changing your payment due date or your  pay plan on a temporary basis. Some insurance companies may be willing to work out a temporary solution for you.

If you have one of the following scenarios where you are considering letting your insurance lapse, contact your insurance agent for advice.

  • You don’t have a driver’s license.
  • You have a license, but you don’t ever drive.
  • You don’t own a car and don’t plan to.
  • You’re out of the country for an extended period of time. (Note: your host country may require you to carry local insurance if you plan to drive while you are in that country.)
  • You have a chronic health condition that prevents you from driving.
  • Your license is suspended, and you’re not allowed behind the wheel.

If you have had an unintentional lapse in auto coverage, contact your insurance agent immediately and start the process of reinstating your coverage. By maintaining continuous coverage, you are more likely to get a better rate in the long run.

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