LEARN ABOUT WHAT HAPPENS IF CAR INSURANCE LAPSES
As a car owner, the last thing that you would want is a car insurance lapse. Not only will that expose you to penalties from the DMV, but will also cause a huge spike in the charges of the new insurance that you would get in lieu of the lapsed one. However, before you know what happens if car insurance lapses, you would need to understand clearly what an auto insurance lapse actually is. As you read on till the end of this article, you will understand the various reasons that lead to a lapse and the doable things from your end once the insurance lapses.
What is a car insurance lapse?
Put simply, a car insurance lapse means that the vehicle that is owned (and probably driven) by you is no longer covered by the minimum coverage limits as mandated by the laws of the state where you live in. The duration of the lapse is the time period between the last day of the insurance coverage and the day when you get new insurance for your vehicle. In addition to that, a lapse would be considered as the duration from the last day of coverage till.
• The registration of the vehicle expires
• The owner submits documents that will testify that the vehicle does not need car insurance any longer
• The owner surrenders the plates of the vehicle
• The owner has bought a new policy in a new state
You need to make a note that a lapse does not always necessarily happen when the policy expires. If the policy premium is not pain on time, the insurer may choose to withdraw the coverage from the vehicle and that would be treated as a lapse of the insurance as well.
Major reasons that leads to an insurance lapse
More than 80% of insurance lapses occur due to failure to renew the motor insurance policy before it expires. There is a plethora for reasons for drivers not renewing the policy within time. While some of them did not remember the expiry date at all, some of them might have been stuck with something so important that they simply couldn’t manage the time to renew the policy before it expired. Other reasons for insurance lapse are as follows.
• If the timely payment of insurance premium is not done by the owner, the insurance would lapse
• If the premium payment is not done at all, it would cause the insurance carrier to withdraw the coverage, thereby causing the lapse of the policy
• High number of traffic violations or multiple number of accidents could also trigger the lapse of the insurance policy of the car
• Lengthy processing time in case you switch providers for the insurance policy
The impact of lapsed car insurance
Once you have understood what a lapse means and what causes a lapse, it is now time to understand what happens if car insurance lapses. In simple words, it puts you in thick soup. Once the insurance lapses, the insurance company notifies the DMV that they are no longer covering the vehicle. This notification causes a number of penalties being imposed on the driver which includes the suspension of the driving license, suspension of the registration of the vehicle, reinstating fines and penalties. In addition to these, the owner will have to file the SR-22 financial responsibility as the insurer would have withdrawn theirs.
The worst part is that when the insurance lapses, you simply cannot take the vehicle on the roads. If you dare to do that, there are high chances that the cops will catch hold of you and that would mean a whole Pandora’s Box to get opened. Heavy fines will get levied, community services will be enforced, the driving license of the driver would get suspended, and to top it all, the registration of the vehicle would get blacklisted. This last thing will give the full liberty to the insurance companies to increase the premium charges for the vehicle’s insurance as they would know that you are left with no option but to take a policy at any cost.
What to do when the insurance lapses?
Mere feeling helpless at the lapse of an insurance policy is not going to help. You will have to do the needful to get it reinstated; otherwise you would simply not be able to use the car any longer. If the policy has lapsed owing to non-renewal, you would need to get in touch with the insurance company right away. If it has been just a few days after the expiry of the policy, the insurance company may be able to reinstate the same against a marginal or no penalty. However, if a substantial amount of time has passed by, the same policy can no longer be reinstated by the insurer.
When reinstating the policy is no longer possible or if the policy has lapsed owing to high number of traffic violations, the only way left in front of you is to shop for a new policy from a new provider. You would have to be ready to face the heat of a surged up insurance rate as the other carriers would be aware that your previous policy had lapsed and that would empower them to charge you with exorbitant prices for the new policy.
The whole process of getting an auto insurance policy will have to be repeated wherein a surveyor from the insurance company would inspect your vehicle and submit his findings to the company, who will then decide on the charges of the new insurance policy. The whole process is certainly very tedious, time taking and most importantly, very annoying.
Now that you know what happens if car insurance lapses, it is best to set a reminder for renewing the auto insurance policy before the expiry date. Most insurance providers do remind their customers about renewing the policy on time. If you pay heed to those reminder calls, you would never miss renewing the same and avoiding the lapsing of the insurance policy ever. Needless to say, you would also have to ensure that you don’t earn yourself a substantially high number of tickets from the cops as that will cause the lapse of the insurance also.
You may want to check out my other guide on Benefits And Tips To Get Car Insurance At No Down Payment and All That You Need To Know About Non Owner Car Insurance And Its Prices