Car insurance policy lapse explained

    Are you thinking of cancelling your car insurance? It might seem to be a good idea because you can save money by paying one less bill, but you should think twice before proceeding.

    Whether you lost your auto insurance coverage while moving overseas or just failed to pay your premium, a delay in coverage would be painful the next time you buy a policy.

    Insurance firms consider lapses in coverage to be a greater risk than those that maintain their policies. Even a one-day lapse in coverage will result in increased prices.

    car-insurance-policy-lapse

    car-insurance-policy-lapse

    What is car insurance policy lapse?

    A delay in coverage occurs when your registered vehicle is not covered by car insurance for an extended period of time. If your policy is cancelled, your policy ends, or you switch insurance providers between policy periods, you will experience a delay in coverage.

    Drivers must have car insurance in order to be financially secure. A auto insurance policy will protect you if you get into a car accident and hurt or harm someone else’s vehicle.

    It can also protect your vehicle from damage caused by traffic accidents and other calamities such as lightning strikes, theft, vandalism, and animal infestations.

    To keep your policy active, you must pay your auto insurance premium on a weekly, bi-annual, or annual basis. If you do not pay your auto insurance, your policy will expire. If you let your policy expire, you will no longer be covered.

    With the exception of two states, all drivers are required to have a car insurance policy in order to legally drive, so driving with a lapse in coverage could result in costly penalties and bills if you are involved in an accident.

    Also read: 7 steps – How to buy car insurance?

    How can I have lapse in my car insurance policy?

    Here are several scenarios in which you can experience a lapse in coverage. You may either:

    • You paid your premium late.
    • You failed to pay the premium.
    • You did not renew your policy.
    • Since you moved abroad, you had to cancel your policy.
    • Your insurer could have cancelled your policy due to a high number of claims, injuries, or fares.
    • You no longer drive, so you cancelled or did not renew your scheme.

    It is also possible to experience a lapse in coverage by changing auto insurance providers. If you’re not careful, you’ll leave a void between the end of your old strategy and the start of your new one.

    Make sure you don’t abandon your old strategy too soon. Purchase your new policy first, until your existing one expires.

    What will happen if my car insurance policy lapse?

    A lapse in coverage occurs when you do not have auto insurance coverage for your vehicle for an extended period of time. There are a few common forms for coverage to lapse:

    • Your insurer has cancelled your policy.
    • You should not reinstate or renew your insurance policy.
    • You change insurance providers, and your new policy does not begin on the same day that your previous policy expired, leaving you uninsured for a few days, weeks, or months.

    Car insurance policy lapse – Short gaps in coverage aren’t the end of the world, and it’s generally pretty simple to have the policy reinstated. If you do not reinstate or purchase a new policy, the insurance provider will automatically terminate your policy and you will be without coverage.

    Also read: Genuine details about car insurance policy coverage

    How a lapse In my car insurance policy affects me?

    You will be uninsured:

    Car insurance policy lapse – It will seem simple, but after your policy expires, you will no longer have auto insurance coverage. In nearly all nations, this means you will be unable to legally drive on public roads.

    If you are found driving without auto insurance, depending on where you live, you can be fined or have your licence revoked. If you are uninsured and get into an accident, you will be forced to pay for repairs or accidents out of your own pocket.

    Increase in potential car insurance premiums:

    Car insurance policy lapse – A lapse in coverage will remain in the insurance record, which insurance providers will consider when determining your insurance rates.

    Insurance firms consider your driving and insurance background when determining how risky of a driver you are, and gaps in coverage will increase your risk profile. If you have several lapses in coverage, some insurance companies will refuse to insure you.

    Vehicle repossession:

    Car insurance policy lapse – If you lease or borrow your car, the vehicle can be repossessed by the leasing or lending company. During the lease term, most lenders expect you to have full coverage car insurance.

    The effect on your driving record:

    Car insurance policy lapse – Certain states require insurance providers to alert the DMV when someone’s coverage expires. A lapse in coverage will be recorded on your driving record, which may result in fines depending on your state of residence.

    car-insurance-policy-lapse

    car-insurance-policy-lapse

    What to do if my car insurance policy lapses?

    The good news is that your insurance provider is legally obligated to contact you before cancelling your policy. Much better, most insurance providers will allow you a 20 to 30 day grace period to catch up with your premium payments before cancelling your policy and leaving you without coverage.

    What to do if the insurance provider sends you a cancellation notice:

    Contact your insurance provider:

    When you obtain your notice, call your auto insurance agent to learn more about the upcoming cancellation. Insurance companies will cancel your policy for a number of reasons, including nonpayment, reckless driving, or violating any of your policy’s terms.

    Attempt to reinstate your policy:

    Most of the time, you will be able to quickly reinstate your policy during your cancellation grace period. Typically, you must pay the owed premiums as well as a reinstatement charge.

    If you are unable to reinstate your current scheme, purchase a new one:

    Car insurance policy lapse – Buy a new car insurance policy might be more expensive, but you’ll want to get one as soon as possible so you don’t lose coverage until your grace period expires. This can be with the existing insurance company or a new one, as long as it is done before the grace period expires.

    Do not drive uninsured:

    Car insurance policy lapse – As previously mentioned, driving your car uninsured is illegal in virtually all states and can result in fines as well as paying the bill if you are involved in an accident.

    If you are unable to pay your auto insurance, you can browse around and obtain quotes from various insurance providers. Many insurers will offer you a discount if you upgrade your auto insurance.

    Also read: All details – Auto insurance purchase online

    How you can avoid a car insurance lapse?

    Making on-time payments is the only way to prevent a lapse in auto insurance. If you receive a cancellation notice, notify your insurance provider immediately to get your policy restored.

    Here are a few more tips to help you prevent a gap in coverage:

    • Pay attention to your policy’s term dates; it’s easier than you think to forget to update your policy.
    • When swapping auto insurance plans, make sure that your new policy begins on the same day that your old one expires. A lapse in coverage will occur even though there is only one day between policies.
    • If you are unable to pay your auto insurance premiums, rather than letting your policy expire, you can search around to obtain quotes from other insurance providers. A high rate at one insurance firm does not always imply a high rate at another. You can also speak with your insurance provider about revising your policy; you could be paying for more coverage than you require.
    • Instead of cancelling or letting your insurance expire if you place your car in long-term storage, speak to your insurance provider about reducing your policies to just comprehensive coverage.

    Also read: Best deals on car insurance

    Also read: Car Insurance full coverage explained

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