There are a lot of people who believe car insurance is for the birds. They are either new car owners or have never filed a claim for their car. When you don’t appreciate the importance of your car insurance, you’re like to let it lapse in a wide range of scenarios.
However, the truth is one should never let one’s car insurance lapse, not even for a short period.
In this post, we’re going to tell you some common reasons why car insurance may lapse, measures you can take when your car insurance policy has lapsed, and when it’s simply okay to let it lapse.
Reasons Why Car Insurance Lapses
- I forgot to pay my bill
- I don’t have the money to pay my bill
- I sold my only car
- My only car broke down
- My only car was in an accident
Avoid a Lapse if Possible
Regardless of the reasons which led you to cancel your auto insurance policy, the consequences are several. It’s imperative to keep your car insurance policy active at all times.
If your car insurance policy has lapsed and you’re still driving your vehicle, you can be held personally liable in the event of an accident. This can lead to serious financial trouble and severe legal hassles as well. Trust me, you don’t want to be in that situation.
If your car insurance has lapsed because you forgot to pay your bill or don’t have money to pay the bill, this essentially means you’re still driving your vehicle. Driving a vehicle without auto insurance can invite hefty penalties if caught.
Once you’re caught and penalized for an being uninsured driver, it will reflect poorly on your driving record and you’re considered a high-risk driver when you’re going to apply for an auto insurance policy next. This essentially means you will not be considered for any low monthly premium.
If you’re without a car for some time, see if you can be listed as a driver on a family member’s policy. If you’re transitioning between two different cars or your car is out of commission due to repairs, you should still carry insurance on your old vehicle until your car is fully repaired.
If you’re unable to pay your insurance premium, ask any of your friends or family members to front money. You can also sell any items or pay via credit card. Alternatively, you could speak to your agent and reduce the coverage to save on your monthly premium and consider a lower rate.
What to Do if You Have a Lapse
If your car insurance policy has lapsed for any reason, you essentially have two options:
- Call the insurance company or your agent and ask for reinstatement.
- Ask if you could be listed as a driver on a family member’s or friend’s policy.
When you request your insurer for reinstatement, they will typically look at your driving record. If you have a clean record and you’ve never had any claims for your policy, they are more likely to reinstate you with a surcharge for lapsing. The surcharge is cheaper than being a high-risk driver.
If you don’t have a vehicle, you could still be listed on your friend’s or family’s policy. The point is when you’re listed on a policy, you’re unlikely to be considered high-risk and hence can get a favorable insurance policy.
Exceptions to the Rule
In some scenarios, you can afford to not have an active car insurance policy. Let’s take a look at those exceptions.
Military Employees: Military employees can obtain insurance without any prior coverage because of their training on base.
Newly Licensed Youth Drive: Unless you have a parental supporting policy, licensed youth drives can still face problems finding coverage from a preferred insurance company.
Driver with Continuous Motorcycle Insurance: If you’ve been maintaining continuous motorcycle insurance, you’re likely to get pre-approval from your auto insurer.
The Bottom Line
No matter what your circumstances are, always make it a priority to pay your auto insurance bills on time and avoid your car insurance from getting lapsed. Even if you have to borrow money from your friend or family member, pay your insurance bills by any chance. The cost of lapsed insurance is very high in the long run.