What Happens If Your Car Insurance Lapses?

November 05, 2019

Maybe you were a little short on cash last month. Maybe your car broke down. Maybe you just forgot. Either way, you didn’t pay your car insurance company on time. So what happens if your car insurance lapses?

It might seem like no big deal — there’s always a grace period, right? And why should you pay car insurance if your car’s not on the road? The truth is, a car insurance lapse is a big deal. Even a short lapse can result in:

  • A rate increase
  • Expensive force-placed insurance
  • Repossession of your car
  • A suspended license or fine
  • Huge financial liability for any costs in an at-fault accident.

But don’t panic! We’ll explain what you can do to fix a car insurance lapse, avoid extra charges and make sure it doesn’t happen again.

How Long Can Car Insurance Lapse?

That depends on your specific situation and where you live. Insurers typically give you a brief grace period of three days, 10 days or more to pay your late premium before they cancel your policy. But that’s not universal! In Virginia, for instance, an auto insurer may legally cancel your policy for non-payment if the payment is even one day late.

If you receive a notice saying you haven’t paid your premium, don’t just sit there and wonder, “How long can my car insurance lapse?” Contact your insurer right away, because they’ll have the answer. Even if you’re not able to immediately pay the bill in full, at least you’ll be able to find out the length of their car insurance lapse grace period and talk to the insurance rep about payment options.

If your car insurance lapsed because it was just too expensive, you can do something about it. Get a fresh start by comparing personalized car insurance quotes on Compare.com.

 

My Car Insurance Lapsed and I Had an Accident!

Getting into an accident when your insurance just lapsed is really bad luck — but it might be OK, depending on the circumstances. Let’s look at a few possible scenarios.

    1. You got into an accident during an insurance lapse, but it wasn’t your fault. If police determine that the other driver was 100% at fault in the accident, then their insurance should pay for any injuries you suffered and/or damage to your car. Your own insurance status shouldn’t matter. But take this as a sign that you need to reinstate your insurance, pronto!
    2. You caused an accident during an insurance lapse, but you’d already taken steps to reinstate your policy. This is a gray area. Let’s say the insurance company sent you a notice two days ago that your insurance had lapsed. You promptly sent in your payment and requested reinstatement. But then, before the reinstatement went through, you got into an at-fault accident. What happens now?

Legally, your insurer may be able to deny any claims related to the accident, because your insurance had lapsed. If you’ve been with your insurer for a while, and you have a track record of on-time payments and safe driving, then they’ll probably cut you a break. If they don’t however, then you’re in the same boat as someone in this situation:

    1. You caused an accident while your insurance was lapsed or canceled, and you didn’t pay your premiums until afterward.

In this scenario, you’re probably out of luck. Because your policy lapsed, your insurance company is not obligated to cover any claims. This means you’ll have to pay out of pocket for any medical bills the other driver/passengers suffered; for any damage to their vehicle, and for any car repairs or medical bills you incur. This can be really expensive. The average auto liability claim for property damage is $3,638, and the average bodily injury liability claim is $15,270.

You can always explain the situation to your auto insurer. Be honest: Say, “My car insurance lapsed and I had an accident,” and ask if they can help. If your car insurance lapse was caused by circumstances beyond your control — bank fraud, a medical emergency, a military deployment — then your insurer may be willing to work with you. The one thing you should never, ever do if you have an accident during a car insurance lapse is lie to your insurance company. If you fudge the date of an accident to make it look like you were insured at the time, your insurer is going to find out. Trust us: You don’t want to get charged with insurance fraud.

Getting Insurance After a Lapse in Coverage

So, how hard is it to get insurance again after you’ve had a lapse in coverage? That depends on how long you’ve let it go.

If it’s only lapsed for a week or two, you should contact your insurance company and request reinstatement. While you may have to pay an extra fee to have your policy reinstated, this is often the cheapest and simplest option. Ask your insurer if they can erase the lapse when they reinstate your policy, which will help you get cheaper rates in the future.

If your car insurance lapse is longer — say, a few months or a year — then you’re better off starting from scratch. Use Compare.com’s quote comparison tool to look at quotes from several different auto insurers, then choose the most affordable option. Just make sure you’re honest about your past insurance coverage and claims history when you’re going through the quote process because insurance companies will check.

If you let your car insurance lapse and you have an outstanding car loan, then your lender may make you get force-placed insurance. This means the lender will purchase a policy for you and force you to pay for it. They do this because if you crash the car without insurance, the lender wants to make sure it gets repaid for the outstanding loan balance. Force-placed insurance is expensive, and it only covers your car. You’ll have to purchase liability coverage separately.

The moral of the story: Getting insurance after a lapse in coverage is tough. If your insurance bill is too high, we have a solution! Find a better deal on Compare.com.

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