Can I buy car insurance after my policy has lapsed?

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Melanie Musson
Recognized Insurance Expert

UPDATED: Mar 13, 2020

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The worst has happened – your financial and personal situation converged and you stopped paying your bills, including your car insurance. Perhaps you filed bankruptcy, or perhaps you are slowly digging your way out from under a mountain of debt. You have a new job and are able now to pay for your car insurance. Your former car insurance has been cancelled and you want to pursue a new policy, either with your former company or a new one. Will any companies consider you besides the high-priced “secondary market” companies? Will your old company take you back? The answers to these questions will be determined by a few factors about why you stopped paying your car insurance in the first place.

How do car insurance companies view non-payment of premiums?

Car insurance companies tend to take a very dim view of someone who purposely does not pay for car insurance but continues to drive, and that view becomes even dimmer if the person engages in risky behavior while uninsured. The very worst scenario to find yourself in, from an insurance company’s point of view, is one in which you are cited for a serious driving infraction while you have no insurance. If you are stopped for a DUI and have no car insurance coverage at the time, it is almost certain that you will have a hard time finding a company willing to give you coverage once you regain your license.

Car insurance companies are highly sensitive to risk, basing most of their decisions on the perceived risk of insuring an individual. Unfortunately, someone who drinks and drives is often a repeat offender, and the fact that you allowed your car insurance to lapse and engaged in this dangerous behavior is not only a red flag to the insurance company but a sign that you might need to consider much more intensive help before getting behind the wheel again.

However, if you have “turned over a new leaf,” you can certainly get car insurance after a lapse such as the one described above. The problem is that you will be classified as such a high risk that it may be next to impossible to find affordable premiums. However, if you make it a priority to pay the higher costs for insurance for a year and keep your record clean, your premiums will eventually come down. Lapses in insurance coverage, like traffic violations, have less of an impact on your premiums over time. Keeping your premiums current and driving safely for a period of time are the only two things that will “fix” this situation.

There is another situation, however, that inspires far more leniency on the part of car insurance companies, and that is a lapse due to special financial circumstances. Suppose that you suddenly lost your job with no warning, and in today’s economy you are having a hard time finding another. You lose your house and eventually your car is repossessed. This is a horrifying situation, but fortunately an insurance company will not view this in the same light as someone who simply stopped paying for premiums. In cases like this, many people file bankruptcy. After filing bankruptcy, you may be able to save up enough to buy another vehicle. When you look for insurance for this car, be sure to talk to the agents about why your coverage lapsed to begin with. Companies all look at these situations differently, and it is very possible you will find one willing to deal with you and give you a reasonable price for insurance.

How can I avoid a lapse in car insurance coverage?

There are several things you can do to avoid lapses in the first place. Although it may be hard, make your car insurance premium payments a priority. Put aside enough in a small savings account to cover six months’ worth of premiums. By doing this you will always be six months ahead on your car insurance payments, and this gives you plenty of time to realize if you are experiencing severe financial difficulties that may lead to non-payment.

Also, before you are forced to “ignore” your insurance bill, talk to your agent. It is very possible that you can reduce your insurance premiums by lowering your coverage levels, raising your deductible levels, or both. You may also qualify for discounts of which you were unaware.

If you are unable to lower your insurance costs enough to make them manageable, it may be time to look for another insurance carrier. You may be surprised at the difference in price between companies for the same coverage, so “shopping around” is always a good strategy if your insurance premiums have become too high.

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