What Happens if Your Car Insurance Lapses?
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Written byJ.J. Starr
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J.J. Starr is an insurance and personal finance expert who has been writing for Compare.com since 2022. Her work has been published across the web, appearing on sites such as Insurify.
Prior to writing for Compare.com, J.J. was a registered banker and life insurance consultant, holding a Series 6, FINRA, and life insurance license. She also earned a master’s degree in writing from New York University.
J.J. has a passion for helping people save money by explaining complex topics like car insurance in a way that is simple and easy to understand.
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Edited byNick Versaw
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Nick Versaw leads Compare.com's editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. With nearly a decade of experience writing and editing insurance and personal finance articles, his work has helped readers discover substantial savings on necessary expenses, including insurance, transportation, health care, and more. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor's Degree in Digital Journalism.
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Reviewed byAmanda Clear
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Amanda Clear is a licensed Property and Casualty insurance agent who runs her family insurance agency providing coverage in the states of Connecticut, New York, and Vermont. She specializes in providing customized insurance packages to her clients that provide the best coverage for the price that they can afford. She holds a bachelor's degree in English from Sacred Heart University in Fairfield, CT, and works as a freelance editor, proofreader, and writer outside of her insurance career.
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If you drive your car during a car insurance lapse, you’re driving uninsured — something 14% of U.S. drivers do every day, according to the Insurance Information Institute (Triple-I). Even though it’s common, lapses are always bad news for policyholders and other drivers alike.
An insurance lapse — especially one that lasts only a day or two — may seem like it’s not a big deal, but these lapses can easily result in a domino effect of consequences. Not only are you financially vulnerable if you drive uninsured, but a single lapse in coverage can cost you hundreds of dollars in future insurance premiums. We want to help you avoid those headaches.
In this article, we cover everything you need to know about car insurance lapses, their repercussions, and how to prevent them.
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Car Insurance Lapses and Grace Periods
A car insurance lapse is a gap in auto coverage that leaves you uninsured until you start a new policy. Several events can cause an insurance lapse, but most insurers offer ways to avoid them, from customer notifications to grace periods.
Grace periods offer a window after the premium due date during which your insurer will keep your policy active and allow you to make a late payment without canceling your policy. Grace periods vary by company, but most offer ones that are seven-to-30 days long.
Even without cancellation, using a grace period (and making a late payment) can raise rates and create other issues. Staying informed and maintaining timely payments is essential to avoid lapses and other potential rate increases.
If you’re having trouble affording your car insurance, explore ways to get a cheaper rate — don’t forget to ask your current insurer about lowering your payment or adjusting your payment plan.
Why Car Insurance Lapses Happen
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Auto insurance lapses are common and can happen for a few reasons, including:
The insurance company cancels your policy due to non-payment or too many late payments.
The insurance company cancels your policy because of misrepresented personal information.
The insurance company cancels your policy because of significant changes in risk factors, such as a serious accident resulting from high-risk driving behaviors.
You cancel your policy and don’t replace it with a new policy or set the new policy start date more than a day after the old one ends.
The insurance company doesn’t renew your policy (AKA “non-renewal”), and you don’t get a new policy elsewhere.
Administrative errors
You must stay proactive in managing your policy by ensuring your contact information is correct, your billing method is up to date, and your payments are on time. Otherwise, you can face serious consequences, including higher premiums, potential tickets, and serious financial liability.
Consequences of Letting Your Car Insurance Lapse
Insurance lapses cause several issues, which is why maintaining continuous coverage is so important. Let’s review the primary consequences you could face if you let your coverage lapse.
Fines and penalties: Allowing insurance to lapse can result in legal consequences if you’re caught, including fines, license suspension, registration revocation, and SR-22 filing requirements.
No coverage for accidents: Without insurance, you’re personally responsible for covering the costs of a car accident — ranging from $5,700 (property damage only) to $1,778,000 (death), on average, according to the National Safety Council.
Premium increases: Insurance companies often view a lapse in coverage as a risk factor, leading to higher premiums when reinstating coverage.
Difficulty obtaining coverage: A lapse in auto insurance coverage can also make it harder to find an affordable policy in the future due to the associated higher risk. Potential SR-22 requirements can also limit your choice of insurer.
Of these, financial vulnerability poses the most serious and long-lasting consequence, but let’s delve deeper.
Lapsed car insurance and accidents
If you cause an accident during a lapse in coverage, you’re responsible for covering all expenses related to the damages and injuries you cause. That means you’ll pay for repairs or replacement of both your vehicle and the other driver’s, any other property damage and the medical bills for everyone involved.
Causing an accident while uninsured makes you an even higher risk than just a lapse in coverage. Even if you aren’t at fault, you’ll still face fines and penalties. Worse, if the other driver was also uninsured, you’ll have to cover your car repair, medical bills, and potential attorney fees.
How a Lapse in Car Insurance Affects Your Rates
Premiums rise after a lapse in car insurance coverage, on top of potential reinstatement fees from your state’s department of motor vehicles (DMV). That’s because coverage lapses are associated with a higher probability of making a claim.
How much higher are rates after a lapse in coverage? The table below shows the difference in rates for liability, full coverage, and all policies, based on data from Compare.com.
| Average Monthly Liability Premium | Average Monthly Full-Coverage Premium | Average Monthly Premium for All Policies |
|---|---|---|---|
Prior insurance coverage | $110 | $193 | $138 |
No prior insurance coverage | $128 | $244 | $154 |
Difference | $18 per month | $51 per month | $16 per month |
Drivers with liability-only policies see a 16% rise after a lapse on average, while those with full coverage see a 26% increase. That means drivers pay an average of $216 to $612 more annually — even if their coverage lapses for just one day.
Different insurers will weigh insurance lapses differently when determining your rate, so, if you’ve experienced a lapse, be sure to compare your policy options before buying a new policy.
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What to Do if You Have a Lapse in Coverage
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A lapse in insurance coverage can be stressful, but you can resolve the situation quickly. Here’s what to do if you have a lapse in coverage:
Determine the reason for the lapse, whether it’s due to missed payments, non-renewal, or an administrative error.
Reach out to your insurance company as soon as possible to discuss your options for reinstating coverage or resolving the issue.
If the lapse was because of missed payments, pay any outstanding premiums to reinstate your policy.
Your insurer may request documentation or information to process the reinstatement of your coverage, so be prepared to provide any necessary paperwork.
Be aware of any other potential consequences of the lapse, such as fines from the DMV if your state requires insurers to report lapses.
Compare quotes and buy a new insurance policy (more on this next).
Come up with strategies to prevent future lapses in coverage, such as setting up automatic payments.
How to get auto coverage after an insurance lapse
To get insurance after a lapse, get quotes from several insurance companies, including your most recent insurer, if possible. Disclose your lapse period up front — providing false information allows your insurance company to raise your rates or cancel your policy altogether (which can lead to even higher rates on future policies).
Ask about policy rules, grace periods, self-monitoring options (mobile app, online accounts, etc.), and other relevant information for managing your new policy.
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How to Avoid a Car Insurance Lapse
Continuous insurance coverage protects you from financial and legal repercussions. Here are some tips to avoid a lapse in coverage:
Set up automatic payments: Opt into auto pay to ensure you pay monthly premiums on time.
Set reminders: Set calendar or phone reminders to alert you before your insurance policy payment due dates or renewal dates.
Keep contact information updated: Your insurance company should have your current contact information to send notifications about renewals, payments, and potential issues.
Monitor your policy status: Regularly check your insurance policy status to verify you paid your premiums and your coverage is active.
Review grace periods: Look up your insurer’s grace period policy to determine how much time you have to make a late payment without risking a lapse.
If you have trouble with your policy or payment, contact your insurance agent right away to address the problem.
Car Insurance Lapse FAQs
The insurer determines the length of the grace period, but most periods last between seven and 30 days. Multiple late payments can lead to policy cancellation.
Does a car insurance lapse affect credit?
It’s possible. Car insurance payments can affect your credit if you don’t pay your premium on time. Your insurer could report your missed payments to credit reporting agencies and send your past-due bill to a collection agency.
How long does a lapse in auto insurance stay on your record?
It depends. A lapse in auto insurance can stay on your record for one to five years or more, potentially affecting your insurance rates and eligibility for discounts well into the future. These periods vary by state and insurance company.
What happens if you miss a car insurance payment by a few days?
It depends. Missing a car insurance payment by a few days can result in a late fee from the insurer, but the company will often maintain your coverage during a grace period.
Can a lapsed insurance policy be reinstated?
Yes. In many cases, a lapsed insurance policy can be reinstated by contacting the insurer, paying any outstanding premiums, and fulfilling any other requirements the insurance company sets.
What should you do if you no longer need car insurance?
If you no longer need car insurance because you’re selling your car and don’t plan to drive, contact your insurer to cancel the policy. Allowing the policy to lapse on its own can result in fines, penalties, and difficulty obtaining insurance in the future.
Data scientists at Compare.com analyzed more than 50 million real-time auto insurance quotes from more than 75 partner insurers in order to compile the rates and statistics seen in this article. Compare.com’s auto insurance data includes coverage analysis and details on drivers’ vehicles, driving records, insurance histories, and demographic information.
All the rates listed in this article have been collected from a combination of real Compare.com quotes and external insurance rate data gathered in collaboration with Quadrant Information Services. Compare.com uses these observations to provide readers with insights into how auto insurance companies determine their premiums.
Sources
Insurance Information Institute, “Facts + Statistics: Uninsured motorists,” accessed April 8, 2024.
National Safety Council, “Costs: Costs of Motor-Vehicle Injuries,” accessed April 8, 2024.
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J.J. StarrInsurance Writer
J.J. Starr is an insurance and personal finance expert who has been writing for Compare.com since 2022. Her work has been published across the web, appearing on sites such as Insurify.
Prior to writing for Compare.com, J.J. was a registered banker and life insurance consultant, holding a Series 6, FINRA, and life insurance license. She also earned a master’s degree in writing from New York University.
J.J. has a passion for helping people save money by explaining complex topics like car insurance in a way that is simple and easy to understand.
Nick Versaw leads Compare.com's editorial department, where he and his team specialize in crafting helpful, easy-to-understand content about car insurance and other related topics. With nearly a decade of experience writing and editing insurance and personal finance articles, his work has helped readers discover substantial savings on necessary expenses, including insurance, transportation, health care, and more. As an award-winning writer, Nick has seen his work published in countless renowned publications, such as the Washington Post, Los Angeles Times, and U.S. News & World Report. He graduated with Latin honors from Virginia Commonwealth University, where he earned his Bachelor's Degree in Digital Journalism.
Amanda Clear is a licensed Property and Casualty insurance agent who runs her family insurance agency providing coverage in the states of Connecticut, New York, and Vermont. She specializes in providing customized insurance packages to her clients that provide the best coverage for the price that they can afford. She holds a bachelor's degree in English from Sacred Heart University in Fairfield, CT, and works as a freelance editor, proofreader, and writer outside of her insurance career.
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