Most companies check if an applicant had a break in coverage recently and may apply a surcharge if there is an interruption. That is what happens if auto insurance lapses. You may think that you will save some money by stopping couple of months when you are going away or dropping it when you sold the old car and haven’t bought a new one yet. The worst is to let a policy be cancelled due to non-payment of premium. This gap may come back and cost you more than the savings you achieved.
How Do Vehicle Insurers View a Lapse?
Whatever the reason for the lack of coverage it does not look good on records. They separate motorists who cannot maintain a steady history from the ones who pay close attention to these things. They like to see those premiums keep coming for years. They offer the best rates to reliable applicants so that they stay for a long time.
Why should they reduce prices for someone who may or may not stay long? Intermissions in policies suggest that such drivers are not keen to keep coverage, negligent in the way they maintain it and maybe okay with breaking the state laws that require at least minimum liability. whichever way it is viewed it doesn’t look good and certainly it doesn’t deserve any discount.
Do You Have Good Reasons for Stopping Automobile Insurance?
As life changes we go through processes and stages. You may move abroad for a while and decide not to keep the car at home. Moving to a large city would increase the costs of owning a vehicle. You may decide that public transport is good enough for you to rely on and give the car a skip. Or you may not be able to afford it anymore or just like to save the money for Uber.
These are all good reasons for giving up a policy. However, they are not good enough reasons to avoid the future rate increases when you want to reinstate vehicle insurance. You may be fine with these rate hikes in the future if you would save enough money for not having it for some time. At least, they will be higher for the first six months. Then, they will start coming down as long as you don’t have any claim or ticket. So, it may not be as bad.
Allowing a policy to be interrupted must be a decision based on calculations. If you are only going away for couple of months and keeping the car you should consider just paying the premium, which can be substantially reduced if the car is parked in a safe location while you are away. If the savings you will have much more than the possible rate increases, you won’t have any problem giving up the policies you have.
Driving with Lapsed Car Insurance?
Looking at the figures, about 14% of American motorists drive without any protection. Many of them cannot give up driving even when they cannot afford the premiums. It could mean that they lose their jobs or simply cannot function without using an automobile.
Nonetheless, the costs of getting caught can be significantly more than the premiums you should have paid. Depending on where you live you may have to pay large fines and court costs, face license suspension and impoundment of the vehicle. All of these will make it harder to find coverage at reasonable prices in the near future.
Having an Accident when Auto Insurance Lapsed
What happens if you have an incident in that period? You will be in serious trouble if you were at fault in an accident and your coverage ran out. First of all, you will still be liable to pay for the damages and injuries you caused. You will probably be taken to court by third parties who suffered losses in the accident. Plaintiffs will seek immediate damage settlement and go after your assets or levy on pay checks. Also, authorities will probably prosecute for causing injuries after giving up the compulsory liability provision.
Also, many states have some sort of “no pay no play” laws that will prevent an uninsured driver from claiming on third party policies even 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. Carriers will not take it kindly to see that not only you had a gap in insurance but also you carried on driving. Some companies may refuse to offer a quote while others will want a lot of money.
Dropping Coverage when You Have a Lease or Loan
A lease or loan agreement will most likely require you to keep the automobile properly protected at all times. The moment the leasing firm or lender finds out about the pause they will give you a short period of time to re-instate 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.
What Can Be Done to Avoid Lapse in Car Insurance?
You should write the renewal date down on a calendar to avoid missing it accidentally. If you are not confident about keeping track of things, set up automatic renewal and payment just in case. Furthermore, pay the full premium at the start instead of instalments. This could save you interest charges or qualify for discounts as well as eliminating the chance of a cancellation due to non-payment. Even a day missing it can end up being costly.
Things to Know to Get the Cheapest Rates after a Lapse
- Remember that each automobile insurer treats it differently. While a few of them would apply a surcharge some others may not be bothered by it. So, you should get a few quotes from different ones to make sure you get the lowest rates.
- They look at last 12 months to see if there is any gap to be concerned before they give you a quote. Previous years are not as important as last year.
- There is a chance some may ignore anything less than thirty days that happened more than a year ago especially if you have a good excuse. But you should not rely on it.
- Members of the US army may be treated more favorably. Also, you may escape surcharges if you were using a work car that is why you did not have a history of your own.
- Some of them may offer discounts for drivers who have never had a lapsed auto insurance policy for years. If you have no break in cover you want to make the most of it by shopping around and getting the most competitive quote.