Insurance Lapse: What Drivers Should Know

An insurance lapse can cost more in the long run than what you might save by not paying premiums. Here’s how to avoid a lapse.
Isabel Contreras
By Isabel Contreras 
Updated
Edited by Ben Moore Reviewed by Brenda J. Cude

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With the many responsibilities we all juggle on a daily basis, it can be easy to miss a car insurance payment. But a missed payment could quickly lead to your policy being canceled, resulting in an insurance lapse. And if your insurance lapses, you'll no longer be able to drive legally and can expect higher car insurance premiums in the future.

Although going without insurance should be avoided, drivers can move past a gap in coverage. Here’s what to do if your insurance lapses.

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What is an insurance lapse?

An insurance lapse is a period of time in which a car owner or lessor does not have auto insurance. Every state, except Virginia, requires drivers to carry a minimum amount of car insurance. Driving without this required coverage is illegal and could result in a fine, license suspension or even jail time.

Even if your car is stowed away while your insurance lapses, this gap in coverage can result in insurers classifying you as a high-risk driver, which would likely raise your future rates and shrink your coverage options. To avoid paying more for car insurance, it’s best to exhaust all your options before letting your insurance lapse.

The good news is, your coverage won’t be canceled the second you miss a policy payment. Insurers are legally required to notify their policyholders before canceling coverage, and to offer a car insurance lapse grace period to make up the late payment. In most cases, drivers will have 10 to 20 days after their payment was due to pay their bill before their insurer cancels the policy.

What should I do if I can’t make an auto insurance payment?

The best thing to do if you can't pay your premium is alert your insurer before you miss a payment. They may be more willing to work with you if you're proactive.

It’s wise to avoid canceling your auto insurance policy, because the lapse in coverage could mean insurers view you as a high-risk driver, resulting in increased auto insurance rates in the future. But if you do cancel your auto insurance policy, be sure not to use your car since it's illegal in most states to drive without insurance.

Here are some cost-cutting options to consider before canceling your auto insurance:

  • Shop around for a cheaper policy and ask about discounts. Insurers use different parameters to price their policies, so it never hurts to compare car insurance rates from other companies in hopes of finding a more affordable option. While you’re at it, make sure to ask about any car insurance discounts you may qualify for.

  • Reduce your coverage. If your policy includes comprehensive and collision coverage and you don’t have a car loan or lease that requires you to have full coverage, dropping these coverage types will lower your premium. Both pay out up to the current market value of your vehicle, minus your deductible. If your car isn’t worth much, you can likely drop them.

  • Raise your deductible. Opting for a higher deductible will lower the cost of your policy. But be sure you're able to afford the higher deductible in the event you need to file a claim.

If you’re likely to miss an auto insurance payment due to forgetfulness, there are steps you can take to make your premium payments breezier.

Enrolling in automatic payments, either on a monthly or a yearly basis, can help you make sure you’re never late to pay your premium. Besides ensuring you’ll stay on track with your bills, enrolling in autopay will often get you a discount on your policy — it’s a win-win.

How can I get coverage after an insurance lapse?

If you missed a payment beyond your insurer’s grace period and no longer have coverage, it’s best to buy a new auto insurance policy as soon as possible. This will allow you to drive legally and rebuild your history as a safe driver to put that insurance lapse behind you.

After an insurance lapse, your state might require you to have an SR-22 form before you can purchase a new policy and start driving again. This is an official document that proves your policy meets your state’s minimum required liability coverage.

Not all insurers file SR-22 forms, and some refuse to cover drivers with an insurance lapse on their record. So you might need to get a policy from a nonstandard insurer, also known as a high-risk auto insurance company. These companies typically charge drivers higher rates than standard insurers, and may only offer your state’s minimum required coverage.

Most states require high-risk drivers to have an SR-22 form for three years. After that period, you'll likely be able to get a cheaper policy from a standard insurer.

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