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How a Lapse in Coverage Affects How Much You Pay for Auto Insurance

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By Erin Thompson on December 10, 2019 in Policy Changes

So, it happened. You had a lapse in coverage. Maybe you decided to bike everywhere for the summer. Maybe you wanted to backpack around Europe for a few months and you canceled your insurance. No matter the reason, a gap in insurance coverage may impact how much you pay, so we’re here to help you understand how.

What is a lapse in coverage?

A lapse in coverage simply means you didn’t have auto insurance for a period of time. Some common reasons could be:

  • You forgot to pay for your auto insurance
  • Your insurance company canceled your policy
  • You decided to no longer drive your car for a while and didn't pay to continue the auto insurance policy
  • You license was revoked and you didn’t continue your policy
  • You’re in the military and just back from a deployment, and haven't purchased a new car insurance policy
  • You purchased a new vehicle and forgot to add it to your policy.

What happens if your insurance lapses

Unfortunately, if your insurance lapses, you’ll typically see your auto insurance rate increase. A gap in car insurance may be seen as a higher risk to insure than someone who pays their premiums on time, and insurers offset that risk by charging a bit more for your policy.

In addition, some insurers don’t even sell insurance to people who don't have an active policy. So, it can be harder for someone who didn’t previously have insurance to get a new policy.

Driving without insurance

If you’re driving without insurance for whatever the reason, you could run into more issues than having to pay more for your policy. Every state requires you to have some type of Liability Car Insurance at the very least, and you can get fines or tickets if you’re found driving without insurance. It could even cause you to lose your license for a time if those tickets start adding up.

Those negative impacts can then also cause your insurance rate to go up when you get your insurance back. We hate to be the bearer of bad news, but the negative effect of driving after your car insurance lapses can lead to higher and higher rates.

My car insurance lapsed and I had an accident

A bad situation to be in would be getting into an accident when you have a lapse in coverage. If you’re found to be at-fault for the accident and you don’t have insurance, you’ll be on the hook for the payment of all the damages done to both the car you hit and the people in the car. Those damages can add up quickly and is probably not something you want to pay out-of-pocket.

Insurance lapse on a financed or leased car

If you’re financing a car, you are required to have insurance by the financing company. If they find out you don’t have insurance, they may repossess the car. Or, they may find insurance to cover themselves and charge you for it. That insurance is often more expensive than what you’re paying on your own.

And if you’re leasing a car and your insurance is canceled for some reason, you’ll run into similar issues. You are again required to have car insurance at all times, so the car may be repossessed, or you’ll have an expensive insurance policy purchased by the leasing company that you’re responsible for paying.

How gaps in coverage affect car insurance for military personnel

A situation when you may not see higher rates after a gap in car insurance coverage would be if you're in the military. It’s common for those in the military who are deploying to cancel their auto insurance policies and not purchase another until they get back from their deployment. Providers sometimes allow military men and women to purchase insurance after a gap without higher rates.

A common solution for military members is to drop all coverages except Comprehensive Coverage. That helps avoid a gap in insurance coverage and also keeps your costs to a minimum while military members aren’t using their vehicles.

Say Insurance and gaps in car insurance

Here at Say, we can provide insurance to those with gaps in car insurance coverage depending on why they have a gap. The most common situation when Say may provide car insurance for military personnel after a gap in coverage.

Avoid the rate increase by avoiding gaps

The best option to avoid auto insurance increases from a gap in coverage is to make sure you keep your auto insurance policy up to date and active. On-time payments and renewing your policy every 6 months is key. If you do cancel your policy for any reason, make sure you’re upfront with your insurer and talk to them about how re-starting your policy later will be impacted by a gap.

Erin Thompson is the Marketing Manager for Say Insurance. She's responsible for guiding the strategic direction of all Say marketing campaigns. Prior to joining Say, Erin worked for a media agency based in Columbia, MO. She spent several years developing successful advertising campaigns for a diverse set of clients across the United States. Erin began her career in television advertising after earning her Master’s from the University of Missouri Journalism School with an emphasis in Strategic Communication. Her love of communication and helping people directed her to the insurance world.