What To Do If Your Auto Insurance Policy Lapses

An auto insurance lapse, whether intentional or unintentional, automatically designates you as an illegal driver. Failing to provide proof of auto insurance when stopped by the law carries heavy repercussions. Not only will you be fined, but also you'll face the possibility of having your drivers license and/or vehicle registration suspended. The penalties will be even more severe if you're involved in a car accident.
In addition, you'll also face possible repercussions with your auto insurance provider in the form of higher insurance rates.

Definition of Lapsed Car Insurance

Lapsed insurance refers to no longer being covered by your last car insurance provider. The lapse could be due to car insurance cancellation for a particular reason, not renewing your current coverage, or not paying your premium statements.

A lapse takes effect the second your insurance coverage is dropped.

If Your Auto Insurance Policy Lapses

If you car insurance policy lapses, don't shrug it off by thinking, "I'll protect myself by driving more cautiously." The system does not work that way. By law, all car insurance companies are required to notify local DMV offices of dropped or lapsed insurance policies. The law has eyes, as it were.

To avoid legal repercussions you'll either have to stop driving or reinstate your auto insurance policy as quickly as possible.

How to Reinstate Lapsed Car Insurance

To reinstate insurance, contact your insurance provider. If your policy has been lapsed only for a few days and you've maintained a good relationship with your provider―always paid insurance statements on time, clean driving record―there's a good chance your insurance company will work with you toward immediate reinstatement.

The longer you wait, the harder it may become for reinstatement. Plus, you'll also face increased penalties from your DMV. Many state's impose lapsed car insurance penalties. In New York, for instance, drivers are penalized $8 per day. The fine jumps to $10 after 30 days, and $12 per day after 60 days.

Keep in mind that depending on your insurance company, you may, after allowing your auto insurance to lapse, be automatically classified as a "high risk" driver. This in turn will result in a spike in your insurance premiums.

If your insurance has lapsed due to cancellation or non-renewal, you'll need to find a new provider. In most instances cancellation or non-renewal results from "high risk driver" status. So be prepared for higher insurance rates.