When motorists keep their policies without a lapse or gap, they would have continuous insurance. Even if you come to the end of a six-month policy without any interruptions, you can qualify for auto insurance discount for continuous coverage with some companies but you are likely to get 10 – 15% savings only after you have at least 3 years of unbroken insurance history. The longer you have a record the better with most providers.
Some companies don’t offer it and it may not be available in few states like California. Also, discounts vary from one automobile insurer to the other and even with the same provider, depending on how long you have been insured continuously.
Continuous coverage is a good indication that the vehicle owner is serious about insurance, has no money problems, reliable and therefore low-risk. This is exactly the kind of policyholder many companies want hence the discounts. They don’t like to be messed around with payments or deal with someone who doesn’t understand the consequences of allowing an auto insurance policy lapse.
One of the mistakes motorists make is that they confuse continuous insurance discounts with loyalty discounts and believe that they will not get it if they switch to another insurer. This is not the case and you don’t have to be with the same company to qualify for it. Many companies like Progressive, Esurance, Farmers, American Family and other smaller brands honor the time you have been with another insurer and offer a car insurance discount for continuous coverage.
All you need to do is to make sure you don’t have a gap in your coverage when you are switching. This is hardly a problem these days since you can set your new policy to activate at midnight on the day your old policy expires.
Automobile insurance companies ask how long you have had continuous insurance and the name of your previous insurer when they are offering quotes. Then, they can offer a discount based on the answer. Later on, they may verify this information through the companies you said you were insured with or third party data providers like LexisNexis. If they fail to find the information they need, they may contact the policyholder and ask for proof of insurance.
They will tell you what they need to verify that you actually kept your coverage without any lapse as long as you declared. If they don’t get the proof in time, they may take back the discount and ask you to pay an additional premium. However, policyholders can provide this proof at a later date and get their discount back or get it from the next renewal.
Some companies like Progressive can still offer the discount for returning policyholders if they were deployed overseas for a while, unable to drive for some time due to health reasons or took a break for a long trip. You should talk to your previous carrier or even a new one and explain why you didn’t/couldn’t keep your policy and see if they will accept it.
Also, having a reduced policy like Comprehensive coverage only for stored automobiles and non-owner vehicle insurance may be enough to avoid a lapse on your record or qualify for lower rates.
Continuous coverage vehicle insurance discount is interpreted, applied or offered considerably differently among companies. Depending on the carrier, they may only want to know your last insurer, give larger discounts for longer unbroken records, offer the savings only if you are insured with them or don’t appear to offer any discount but their quote algorithm somehow takes it into account. So, you might want to check the situation when you are getting quotes.
In any case, it is extra important to avoid lapses in automobile insurance because the DMV will be informed the moment legally required liability coverage is dropped. If they cannot confirm a new policy, reinstatement or sale of the car, they may start sending you fines and ask for the vehicle license plates back.
Car insurance companies are required to give notice before cancelling a policy. Therefore, motorists may actually have some time before their policies are cancelled due to non-payment or any other reason. They can avoid a lapse by paying the arrears. So, motorists should contact their providers if they missed a payment and see if they can get their coverage going.
At times, companies may ignore small gaps as well if people come back to them and ask to reinstate their policy. For example, if you missed your renewal deadline and went back to your previous insurer a week later, you may still avoid a lapse in your record. The longer you leave it the harder it is to avoid a lapse.