A car insurance lapse – i.e., a period of time where you don’t have a car insurance plan in place – can be a slippery slope! A lapse in car insurance could see you end up with hefty fines, an unwanted suspension of your license, or worse, jail time. It’s crucial to understand the fundamentals of what a lapse in coverage involves. Also, how can you get out of this sticky situation? That’s why we’re breaking down everything you need to know about car insurance lapses, how to avoid a lapse, and procedures to get back on the road without having to spend top dollar!
What Does a Car Insurance Lapse Mean?
An auto insurance policy lapse denotes a period of time when a registered vehicle has no legal minimum insurance coverage in place. A car insurance lapse could arise due to the cancellation or non-payment of premiums. Traveling away from home for extended periods of time (say, an international trip) may also be a reason to end up with a void insurance policy. A lapse in coverage means that you’ll need to reinstate your former policy, if possible, or approach a new insurance firm for a new policy.
How Does One Avoid a Lapse in Car Insurance?
The best way to stay ahead of the insurance curve is by paying your premiums on time. This involves keeping track of when your car insurance premiums are due every month. Make sure to also keep an eye on when your policy expires so that you’re ahead of the curve and renew your policy ahead of time.
A hassle-free way to take care of your car insurance premium payments is by setting up automated bank transfers or insurer payments. Always do your best to practice safe driving while on the road. Safe driving skills are a good indicator to your insurance provider to keep you as a client.
What Is a Grace Period? How Does It Affect You?
State laws require that any missed payments or non-renewal of car insurance policies result in a withdrawal of coverage for your car after alerting you of the situation. You will get a grace period. Often between 10-20 days, depending on the state you’re in. This is to make the payment without having the policy canceled. If you don’t pay up before the end of the grace period, the insurance company will end the policy. This will leave you uninsured. This will affect any new policies you are looking into and will cost you more in penalties and fees. The grace period is the final warning to the customer to prevent a policy lapse.
How Do You Reinstate Car Insurance After a Lapse in Coverage?
If your lapse was brief, with only a handful of payments missed, your insurer is within its rights to reinstate your policy once you have paid your dues. Certain insurance companies and businesses charge a fee for any lapses incurred, so ensure you read the fine print for your policy or consult with your insurer first. Keep in mind that post a lapse, getting reinsured is a tougher and costlier affair. When you select an insurance provider, your state may also require you to file an SR-22, which proves you’re carrying the minimum required insurance for your car.
In Conclusion
Most of the insurers provide a car insurance lapse grace period; therefore, owners can pay the renewal / revised premium without incurring large hikes. Still, it is best advised to pay your premium on time. The lapse in car insurance can lead to a penalty. And most importantly, any accidents during the car insurance lapse will be a financial burden for the owners. You will have to bear the cost of maintenance and third-party compensation from your own pocket; this could extend to several thousand dollars. In order to avoid such a situation, the car owners can go through platforms such as Way.com to find the best renewal quotes that suit their requirements and continue to enjoy a stress-free driving experience.
Renée Martin is a travel and car expert who focuses on road and air travel in the U.S. For the past 6 years, she’s been helping make driving and trip planning easier and budget-friendly for everyday travelers.
