Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • It is important to keep continuous insurance coverage
  • Letting your insurance lapse raises your rates and puts you at risk financially and legally
  • Shop and compare to get the best rates and pay your premiums on time to avoid a lapse

If you have let your car insurance lapse, you have some different options that you may want to think about. The most important thing that you should have at the top of your list is regaining your coverage.

Compare car insurance quotes today to see how where you can purchase insurance for the best price. Just enter your zip code above to get started.

Should I stay on my current plan?

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If your policy has already lapsed due to non-payment, this is somewhat of a moot point. You can, however, get back on your current insurance plan if your insurer takes you back. In most cases, they will.

If the reason for your lapse in coverage was just a failure to pay your premium, resuming your payments will take care of this problem.

Call your insurance company and tell them that you failed to make the premium on time but you want to make good on that now.

They will arrange for you to make an immediate payment (usually a bank draft) that will take the funds out of your account. The faster you pay, the faster the insurer can reinstate your policy.

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What if I can’t afford to pay the premium?

Everyone gets into financial situations over which they have little control from time to time, but a proper management of money on a weekly and monthly basis will usually take care of that problem.

You don’t want to get into a situation where you have no insurance. The financial risk that you incur as a result of having no insurance can be much more devastating than a temporary premium that you must pay.

The best thing to do if you have let your insurance lapse is to get the money as soon as you can. Also, if you are waiting for a paycheck to help you afford to reinstate your policy, you may want to borrow the money from a friend or relative so that you can get back on your policy.

The question you should be asking is not whether you can afford to pay the premium but whether you can afford the huge out-of-pocket expense if you have an accident while off of your insurance plan.

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Reasons for a Lapse in Coverage

There are several reasons why you may experience a lapse in coverage. Some of them are listed below.

  • Failure to pay premiums – One of the most common reasons that an insurance policy may lapse is the failure to pay a premium. Premiums are the amount that insurance companies set up each month to deduct your premium from your bank account.
  • Shopping around for other policies – Sometimes you may be unhappy with your current insurance plan and want to shop around for other policies and insurance options. That’s fine. But make sure you have continuous coverage from your other plan until you have a new policy in hand.
  • Loss of drivers’ privileges – If you lose your driver’s privileges temporarily due to a DUI or other infraction, you may let your insurance lapse, thinking there’s no need to pay it. However, once you have a driving record with such offenses on your record, you may find it harder to get back on your policy.
  • Legal issues – You may have other legal issues such as going through a divorce or owing large sums of money for income tax or other situations. Regardless of your situation, you should make insurance a priority.
  • Money mismanagement – Sometimes it’s just a case of money mismanagement. We all do it from time to time. But having auto insurance is too important not to keep it in force, and the risk is too great. So pay it as soon as you can or shop around for another policy.

The 30-Day Rule

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Remember that insurance companies are required by law to give you a 30-day notice from the time you fail to make your payment to the date of cancellation or termination. In other words, you have a 30-day grace period.

If you can, contact the insurance company when you know that your payment is going to be late and they might be able to work out a temporary payment arrangement to keep your insurance in force.

Remember that continually coming off and onto a policy can raise your premiums. So it’s important to pay off the balance as soon as possible to avoid having your premium increased.

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The Risk of Cancellation

There is some risk in having your insurance canceled, other than just not being covered. You risk your credit being harmed by what is considered a non-payment.

You risk an auto accident that can cost thousands of dollars that you’ll be liable for. You also risk the fact that your insurance company may not want to put you back on your policy if you have let it happen too many times.

Remember also that, if you are stopped without insurance, it will go on your driving record. It is the driver’s responsibility to know what the penalties are in your state if you are driving without insurance.

Choosing a New Insurance Carrier

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If you decide to change companies and policies, you’re in the right place. But remember that the law requires that we advise you to make sure you have continuous coverage.

The first thing you should do is to pay your old premium to your previous company to get caught up if possible. If this is not possible, you need to make a note to pay it off as soon as you can.

If you don’t, it may go on your credit record and damage your credit rating. It can even raise your premiums with your new company.

When you are shopping around for new insurance, remember that you should always weigh the risk with the premium amount that you’ll be paying.

If you frequently drive or drive long distances, you will need more coverage than if you only drive a short distance each year or seldom drive.

Ask your agent with the company you are considering to look at your case and make suggestions based on your circumstances.

Don’t forget about discounts

When shopping for insurance, don’t forget to consider discounts. You may be eligible for one or more of the following discounts:

  • Low mileage discount
  • Government employee discount
  • Military discount
  • Safe driving discount
  • Student discount

The criteria for each of these is different, so you will need to do a bit of research on it or ask your representative to look into it for you.

Many insurance companies offer discounts not listed on their main site, so you will want to ask and compare discounts between companies.

Finally, be vigilant about your bills and pay them on time. Insurance companies often offer a discount on your premium when you set up an automated payment plan. This can save you several dollars each month.

Also, paying annually removes the risk of forgetting to pay each month so you may want to consider that option as well.

Keep your driving record clean, drive safely, and shop around for the best deal. Enter your zip code below to begin comparing car insurance quotes.

References:

  1. http://www.investopedia.com/terms/l/lapse.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186
  2. https://www.insuranceopedia.com/definition/5007/continuous-coverage
  3. http://www.nolo.com/
  4. http://www.investopedia.com/terms/i/insurance-grace-period.asp
  5. http://www.consumerfed.org/pdfs/140310_penaltiesfordrivingwithoutautoinsurance_cfa.pdf