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I Let My Auto Insurance Lapse – Now What?

Young couple looking stressed and overwhelmed in front of a bunch of unpaid bills because they left their auto-insurance lapse.

Updated 03/30/2021

It can happen to any of us — you get busy, something unexpected comes up and — oops! You forget to pay your auto insurance. What happens if car insurance lapses? The moment you find out that you missed a payment, it’s easy to panic and wonder if you can ever get car insurance again. But the good news is that in most cases, you’ll be fine. As long as you act quickly and work with helpful insurance agents, there is a path to get you back to full vehicle insurance coverage.

In most cases, drivers inadvertently allow their policy to lapse. Maybe they missed an email or notification letter, or life just got too busy. Most insurance companies understand that things happen and are willing to work with you when you call them and are honest about the situation.

However, no matter the reason, as soon as you know that you’re driving without coverage, it’s important to stop driving and get your vehicle covered as quickly as possible. In most states, driving without insurance is illegal, and being caught without an auto insurance policy can incur heavy fines. If you get into an accident without insurance, you may even need to file an SR-22 certificate of financial responsibility to continue to drive. So, now that you know you have a car insurance lapse, it’s time to act. Otherwise, these are the things that can happen if you leave your insurance in a lapsed state.

What Happens If Car Insurance Lapses?

If you’re wondering what happens if car insurance lapses regarding future coverage, one of three things will happen. Overall, the amount of time you go without being covered by a valid car insurance policy will determine your available options. The less time you go without coverage, the better your outcome will be.

  • Outcome #1: You reinstate your plan. Auto insurance carriers often reinstate drivers who have a one-day lapse in car insurance or who missed just a few days due to an oversight. Also, depending on your past payment history and driving record, you may still possibly be eligible for reinstatement at the discretion of your insurance company with longer lapses.
  • Outcome #2: Your insurance provider denies you any future coverage. Insurance providers are not required to reinstate coverage, and no law mandates they do. Your insurer may decide to deny you coverage for a variety of reasons. You may have missed their grace period for a lapse in car insurance and are now perceived to be at risk of missing future payments. They could also consider you to be too high of a risk to cover again. This requires you to search for auto insurance coverage elsewhere. This is a situation you want to avoid by keeping a close eye on monthly payments.
  • Outcome #3: Your current provider takes you back— but raises the premium. If your insurance company can take you back but considers you “riskier” to cover, they may require you to reapply for a new and more costly plan. In this case, it’s better to shop around and find a new auto insurance plan from another provider. Compare quotes to get the best deal.

More often than not, the majority of auto insurance companies understand that an overlooked payment is usually unintentional, and they’ll most likely extend coverage to you after you pay. When it’s easy to get back on board, you have contacted the insurance company within the car insurance lapse grace period. This quick action proves that you are a responsible driver and are set on making things right, which looks good on your insurance profile.

Also, customers who have been insured by the same insurance company for some time and whose driving record is clean will have a far greater chance of being reinstated. So, to keep a good relationship with your auto insurance provider, let your agent know about your intentions to pay as soon as possible.

Other Consequences of Letting Car Insurance Lapse

After you find out that your car insurance lapsed, a few things automatically happen behind the scenes. Generally, the necessary parties get notified about the lapse of coverage, presenting you with some consequences if you don’t act right away. When you find out that your car insurance has lapsed, two immediate facts are true:

  • Consequence #1: You’re not covered — not for any damage, injuries, or deaths you cause. Not only that — you’re driving illegally and could face major legal consequences, which include court costs and fines, losing your driver’s license, and possible jail time. These high consequences are associated with driving without auto insurance. This is something you can easily avoid and reverse by getting off the road and calling your auto insurance agent to set things right.
  • Consequence #2: Your insurance will notify your state’s Department of Motor Vehicles about your lapse in coverage. Once notified, the DMV will send you a form asking for details about the lapse and require proof of insurance within a stated period of time. You either need to work with your former insurance company or search for a new coverage plan. For the best prices, shop around for multiple quotes from different insurance carriers. An independent insurance agent can multitask in this department and free your time. Instead of you calling multiple carriers, an independent agent can pull quotes from many sources right away.

While forgetting to pay a common bill can cost you a late fee, letting your auto insurance lapse because of a missed payment can cost you a great deal more than that. Stay on top of your premium’s due date, and make sure you’re getting the best rate on your auto insurance. You may have a generous insurance company that can reinstate your policy even after a significant auto insurance lapse. Or, you may be denied coverage even after just a week of nonpayment. Since the results can vary, be sure to prevent any future lapses in coverage.

How to Prevent Further Lapses in Coverage

It’s easier said than done to stay on top of multiple payments that occur on different dates. To prevent any further lapse in insurance coverage, set yourself up for success. This means you should make it as easy as possible to pay your bills without feeling confused, overwhelmed, or burdened. Thankfully, there are many modern solutions to make bill payment easier — and faster— than ever.

  • Automate everything. Make a payment safety net and “set and forget” your insurance payments. This helps you stay on top of the frequent bills and make less frequent bills like property taxes and vehicle registration more noticeable and harder to miss too. It is essentially an automated “wheel of productivity” that keeps you out of trouble. It also helps if you make a plan to automate all your other monthly bills, such as your mortgage, rent, and car payment.
  • Conveniently time your insurance payment with the rest of your bills. When you time your bills to land on the same day of the month, payment gets a whole lot easier to remember. For instance, start your electricity, water, internet, and any other recurring bill on the 1st or the 15th of each month. This also makes it easy to pay bills when there are funds in your account. Many banks offer online banking solutions that can directly transfer money from your checking account to your desired payee too.
  • Use credit cards if bank funds are inconsistent. Sometimes missed payments come from bounced checks or insufficient bank funds. If your cash flow is irregular, a credit card can help you stay regular. It’s also possible to set up automated payments through a credit card on the utility company’s website. This option allows you to stay on top of your bills even if there could be an overdraft in a checking account. If you do not want to miss another car insurance payment, using a credit card can help you be more consistent — provided that you stay within your credit card limit. If you use this option, stay on top of your online banking to make sure you have enough funds in your checking account and can pay down credit card balances.
  • Pay your insurance premiums in bulk. If you pay the full six-month quote upfront, you don’t need to worry about payments for another half a year. This method can also provide you a discount because you’re paying in bulk too. Ask your insurance provider about the benefits that come with paying your auto insurance quote in full.
  • Lower your payments. The less you need to pay, the easier it is to stay consistent. There may be chances for other discounts, which include a good driver’s record, a higher deductible, or installing an anti-theft device in your vehicle. Making sure that your premium is as low as possible also makes it easier to continue to pay and be on time.

Our final piece of advice is to eliminate any option that involves mailing a check, which can get delayed or lost in the mail. Although this option is available to many insurance providers and utility companies, this form of payment can be unreliable. You may accidentally mail a check a day late, or there could be a delay in mail delivery.

Also, inclement weather can significantly delay traditional mail routes and make you unintentionally late in your payments. If a check is lost, you have to also issue a stop payment order for security reasons, which takes up your time. To find out more about auto payments and other ways to stay on top of your policy, contact an auto insurance agent today.

How to Reinstate Auto Insurance

The procedures each auto insurer uses to reinstate a policyholder following a lapse may differ. However, auto insurance companies need to make sure you won’t be a further risk to them. This may look different to each company depending on their policies. For instance, some auto insurance companies may require you to pay your next quote in bulk to ensure they receive the funds.

You may be offered several payment options as a condition for reinstatement. These may include using a credit card, ATM card, or banking account information on file for automatic withdrawal each month so that your past payment oversights don’t occur again. By agreeing to any of these forms of payment, you’re more likely to get your coverage back quickly and eliminate the risk of future lapses — not to mention, give you peace of mind.

If your auto insurance policy provider decides not to move forward with you, this is not the end of the road. You can easily find an independent insurance agent who can offer you a new set of quotes from other auto insurance providers. From here, you can make an educated choice about which plan provides the best deal for the price.

What About a Lapse in SR-22 Insurance?

A lapse in non-standard insurance is another story due to the already existing SR-22 addendum of financial responsibility. Each state has its own restricted license in SR-22 insurance laws. For instance, if you live in Florida, you will need to contact the Florida Highway Safety and Motor Vehicles to know exactly what will happen to you.

Generally, any lapse in SR-22 insurance makes it necessary for the driver to reapply for a restricted license and refile SR-22 insurance with their insurance agent. This is because the insurance agent is obligated by law to notify the state’s DMV about the lapse in coverage. To make sure you never lapse in your SR-22 insurance, set up autopay when you create an SR-22 insurance plan or pay your premiums in bulk.

Worry no longer about what happens if car insurance lapses, especially when you can get affordable auto insurance from Freeway Insurance. We offer quality auto insurance to fit your needs and budget — even if you have a bad driving record. You can request a free auto insurance quote online, call us at 800-777-5620 or visit one of our offices near you.

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