Car insurance protects you from liabilities when you’re on the road. But if you don’t drive often or are moving abroad for a semester or are being deployed overseas, etc., you might assume you don’t need insurance and let your car insurance lapse. If you cancel your policy without getting a new one, or you let your policy expire, you’ll have a lapse in car insurance which negatively impacts both your insurance rates and your ability to get new coverage.
What is a lapse in auto car insurance?
A lapse in car insurance is a period of time where you don’t have coverage for your registered vehicle. Having a lapse in insurance coverage makes it difficult to obtain a new insurance policy down the line and you’ll end up paying a much higher premium.
If your policy ends and you don’t renew your insurance, your insurance company will tell the DMV that you are an uninsured driver. If your car is still actively registered, the DMV can charge you a penalty for owning a car and not having insurance.
Typically, the longer you wait to renew an old policy or purchase a new one the higher your rate will be. Having a lapse in insurance classifies you as a high-risk driver which, to the insurance company, means you are more likely to get into an accident. Therefore, when you do go back to your insurance, you’ll pay more in premiums.
Why do people have lapses in their car insurance?
There are a number of reasons why people experience lapses in their car insurance coverage. A lapse in coverage can be intentional or accidental. The most common reasons for having a lapse in coverage include:
- You sold your car
- Your missed payments and your policy was cancelled
- Your policy expired
- You stopped driving
Keep in mind that having a lapse in insurance is different than suspending your insurance coverage. For example, if you are deployed in the military or move abroad for six months, you might be able to suspend your insurance coverage and reinstate it at a later date. However, suspension usually isn’t available for leased cars.
If you’re not able to suspend your insurance while you’re away, you may have to accept a lapse in coverage. However, the DMV offers an exemption form for situations like temporary relocation or deployment. If you’re eligible for an exemption, you won’t have to pay DMV and state fines for being uninsured.
Should I avoid a lapse in my car insurance?
Yes, drivers should do everything in their power to avoid a lapse in insurance coverage. Many people assume it’s easy to get coverage once an old policy ends, but it’s much more complicated than that. Not to mention, going uninsured for even a short period of time can be very expensive. Here are some reasons to avoid a lapse in insurance:
- It’s difficult to get a new insurance policy
- Your premium will increase significantly
- You may have to pay DMV and state penalties
- If you’re caught driving without insurance you will be personally liable for an accident
Above all else, drivers should avoid a lapse in coverage to keep their insurance premiums low. If you have a lapse in coverage and purchase a new policy, you don’t want a rate that will blow your budget or to end up unable to afford auto insurance altogether due to high premiums, meaning you’d have to risk driving without it.
What should I do if I have a lapse in car insurance?
If you have a lapse in coverage, the best thing for you to do is simply not to drive. Driving without insurance comes with serious risks, like hefty fines, getting your license suspended and having your car impounded. If you have to use your car, you need to get insurance first.
If you simply let your policy expire, see if the insurance company will reinstate your policy or shop around for a new provider. If you have a lapse in insurance because you couldn’t afford the payments, you’ll need to find a cheaper policy.
The best way to lower your rate after a lapse in insurance is to adjust your coverage. Lower your limits, raise your deductible and take advantage of as many discounts as you can. As an alternative, ask friends or family members if you can get added to their auto insurance policy, which can help you save money.
What states have penalties for a lapse in insurance?
There are 49 states that charge a penalty for having a lapse in insurance. The penalties range from $ 15 to $ 1,000 or more. Some states charge a one-time fee and others increase the fee for every month that you don’t have insurance. You can also have your license or registration suspended in some states – or even be arrested. The states that have a penalty for lapse in insurance are:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
The only state that does not have a mandatory auto insurance law – and therefore has no penalty – is New Hampshire. Drivers in Montana will not be charged for a first lapse, but there is a penalty for a second offense.
Bottom line
There’s a number of reasons why you might have a lapse in insurance coverage. Maybe you failed to make the payments and your policy was cancelled or your policy expired and you never renewed it. If you plan on driving, you need to get a new insurance policy as soon as possible. Driving without insurance comes with serious risks, including heavy fines, suspension of your license or jail time.
Having a lapse in insurance makes you a high-risk driver, so it’s more difficult to get a new insurance policy. Additionally, any coverage you get in the future will be more expensive than it used to be. On top of that, you could be subject to fines from the DMV and your state. Remember that the longer you go without insurance, the more you’ll pay in premiums.
