What Happens If Car Insurance Lapses?

The moment you drop auto insurance or it is cancelled, you would be facing problems due to not having the legally required liability coverage and your vehicle isn’t insured either. Your state DMV will probably be informed by your insurer of the fact that you don’t have liability coverage. If this is not resolved quickly and you are still keeping the vehicle, the DMV can suspend your driver license and ask the vehicle registration plates back as well as sending you a fine.

Driving even though your insurance is lapsed can lead to serious consequences if you have an accident. Without insurance, you would have to pay for all the damages and injuries you may cause to other people and you won’t have coverage for your own automobile either.

There is a high chance, authorities will pursue you in court for causing an accident while driving uninsured. It is a misdemeanor offense to drive uninsured in the majority of states. So, people can be charged with a criminal offence and serve jail time for repeat offences and when there are serious injuries. There may be large fines too.

Also, several states have some sort of “no pay no play” laws that will prevent an uninsured driver from claiming on third party policies even if they are at fault. At least you won’t be able to claim for loss of wages and things like pain and suffering.

Any subsequent record of the accident and related ticket will make the situation much worse when you decide to get covered again. When they see not only you had a gap in insurance but also you carried on driving, Some insurers may refuse to offer a quote while others will want a lot of money.

Even if you don’t have an accident, your car can be confiscated if you get caught driving without insurance and your driver license can be suspended as a result.

Once you want to buy coverage again, automobile insurance could cost more with a lapse in record. Companies offer “continuous coverage” vehicle insurance discounts of up to 10%. Once they notice you have a break in coverage you lose this discount.

Some carriers may ignore a lapse up to 30 days. And several companies ignore the gap in coverage for the military personnel who were deployed overseas and treat them as if there was no such lapse in their return.

Also, any actions taken by your state DMV for not having insurance like driver license suspension will go on your driving records and affect the premiums even more. That is why motorists should deal with a vehicle insurance lapse as quickly as they can if they still have the auto and want to drive in order to avoid getting penalized by the DMV and insurance companies.

Often it may just be a case of reinstating the coverage or buying another auto insurance the moment you realize your policy is lapsed. This would allow people to get ahead of any issues.

If you missed your premium installment, you may actually have time before your car insurance policy is lapsed because states require companies to serve a notice of cancellation before they can cancel a policy. So, you should contact your insurer immediately and see if you can pay the premium arrears and continue coverage. If not, you should find alternative coverage to replace your policy from the date it will be cancelled or buy it immediately if it is already terminated.

If you received a cancellation or non-renewal notice, you should shop around for a replacement auto insurance and set it to start the moment the notice period ends.

A lease or loan agreement will most likely require you to keep full coverage automobile insurance at all times. The moment the leasing firm or lender finds out about the policy lapse they will give you a short period of time to reinstate it or buy a new one. If you don’t comply, they can buy a policy for it at a steep price and charge the costs to you. They can even repossess the car, depending on the contract.

If vehicle owners are having financial problems, they may talk to their insurers to see if they can spread the premiums. They can also reduce coverage or increase deductibles to be able to lower car insurance costs. In worst cases, they can actually take the vehicle off the road and fill out a sworn affidavit with their DMV to that effect to avoid getting penalized by the DMV.

Also, if they sold their cars or they have insurance but it doesn’t somehow show on the records, they should contact the DMV to correct the issue.