how does a lapse in auto insurance affect you?While much attention is given to providing consumers with information on how to obtain and manage auto insurance policies, there seems to be less information available about insurance gaps or lapses in insurance policies. Insurance lapses and coverage gaps are, unfortunately, not all that uncommon – since life can be unpredictable, people can end up in unexpected situations which cause them to drop or lose coverage. While such situations may be less than desirable, they can be managed or even avoided with some planning. Read on as we talk about insurance lapses, their effects and what you can do to mitigate the damage and even prevent them from happening.

What is an insurance coverage gap?

A coverage gap occurs when your insurance coverage ends before you can lock-in new coverage or before you can ensure that your existing coverage will continue. A gap of any kind is bad because it’s essentially a designated period of time in which you have absolutely no insurance and are guaranteed to be fully liable for any accidents that your vehicle is involved in. Also, individuals who experience a lapse in auto insurance, or who otherwise go without coverage, are seen as risky by insurance companies and might end up paying a higher price when they finally do get insurance. Finally, most states have penalties for driving without coverage, and in some of these states, it’s illegal to operate an uninsured vehicle, so unless you plan to sell your car and simultaneously turn over your license plates, insurance gaps should be avoided at all costs.

What causes an insurance coverage gap?

Coverage lapses, which cause gaps, can often occur as errors of personal judgment – for example, late payments could result in the termination of your policy. Additionally, failing to renew your terms could cause your insurance to lapse. In some cases, violations of your insurance’s terms – like engaging in fraud – can end your insurance, while certain circumstances, like developing a debilitating disease which inhibits your driving capabilities, might also encourage an insurer to terminate your policy proactively. In any case, whatever the reason, if you intend to drive in the near future, you should try to avoid a coverage lapse.

What should you do to prevent a lapse in auto insurance?

If you have some major event that you predict will impact your need for insurance, talk to your insurance provider. For example, if you’re going abroad for a few months, you likely won’t need insurance, but you shouldn’t cancel your policy. It’s important to note that certain individuals, like those serving in the military might be allowed to suspend or, in some cases, cancel their policies and use DMV exemptions to protect themselves from some of the consequences.

In instances where your policy is terminated suddenly, you should reach out to your insurer and make sure the issue is resolved before you continue driving. If you opt not to drive, be aware that until you surrender your license plates or have proof that your vehicle no longer needs insurance (e.g., it’s been repossessed), you’ll still have a lapse in auto insurance.

What should you do after a lapse in auto insurance?

If your insurance lapses, you should immediately talk to your insurer to reinstate your policy. However, after a few days of lapsed coverage, it’s important to note that it becomes harder to reinstate your insurance. If you’re unable to reinstate your auto insurance, your only option is to purchase new insurance from a different provider.

For more information on managing your auto insurance policy, keep reading our auto insurance blog.