Gianetta Palmer is a writer for, copywriter, and essayist. Her work has appeared in, Healthline, and The Dyrt Magazine. She is the author of Scrunchie-Fried and writes a lot about car insurance in her spare time.

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. She also specializes in automa...

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Reviewed by Melanie Musson
Published Insurance Expert

UPDATED: Mar 13, 2020

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If you have allowed your car insurance coverage to lapse, you could be in for some unpleasant surprises when you try to obtain a new car insurance policy. In order to understand the potential consequences of a car insurance lapse, you should be familiar with your state’s rules for lapsed insurance and what car insurance companies can do.

What is a lapse in coverage?

Strictly speaking, a lapse in coverage occurs if your insurance is not in effect for even one day. Of course, this could happen for a variety of reasons. Some people mail in their payments and the premium might not reach the company in time to beat the “11:59” deadline on the day coverage expires. In other cases, someone might honestly forget to take a payment by the agent’s office or go online and pay the premium. Honest slips like this do happen, and most states recognize that anyone could forget or have a check lost in the mail. Therefore, few states press for “no insurance coverage” status unless it is clear that you have not had coverage on your vehicle for at least a few days. At that point, you may be reported as an uninsured motorist to your states Department of Motor Vehicles and you may suffer legal consequences, especially if you are pulled over by a police officer.

There are serious penalties in all states for driving an uninsured vehicle, and in some states you can lose your license for a period of time for your first offense. Penalties tend to increase in severity for each subsequent offense, so allowing your insurance to lapse more than once may bring you higher fines and even jail time.

Even if you avoid legal consequences, however, one of the bigger problems with allowing your automobile insurance to lapse for even one day is that it can affect your future insurance premiums, no matter what your state’s position is on the matter. A lapse in coverage, even if it is only for one day, will always be recorded by your insurance agency, even if they forgive the lapse and continue your coverage uninterrupted. This means that if you change companies at some point, the new company may assess you as an “uninsured driver” for purposes of pricing your premiums. This means that you will pay more for your car insurance than a driver who has had no lapses. New companies will find out about your payment lapses when they review your insurance history, so it is best to be honest with your new company if you have had a lapse in coverage.

Not every situation in which you have no insurance is considered a lapse in coverage

If you sell your car and are without a vehicle, the lack of automobile insurance is not considered a “lapse.” However, if you are on another person’s policy as a driver and that person allows his or her insurance to lapse, it is possible this will show up on your record as well.

In order to avoid lapses in coverage, it is important to be aware of your insurance premium payments and keep them manageable. Many people lose a job or have other financial setbacks, and fail to think about what this will do to them when renewal time comes. Faced with a bill of several hundred dollars due in just a few weeks, some people panic and do not pay their car insurance or make any provisions for lowering their premiums. This is unfortunate, because while your record is good is the best time to look for lower premiums on car insurance, or to negotiate with your company for a better rate.

How can I make my car insurance payments easier to manage?

There are several ways you can do this. First, if you are happy with your current insurance carrier, talk to your agent about ways to lower your bill. Be sure you are qualifying for all available discounts and that they are applied to your premiums. You can also lower your car insurance rates by adjusting your coverage amounts as well as the level of your deductibles. By raising your deductibles, you may be able to significantly lower your insurance premiums while still keeping coverage on your car at a manageable price.

If you simply cannot afford your car insurance with your present company, even with these adjustments, it is time to look for cheaper insurance. You can do this by entering your ZIP code above. Car insurance companies are anxious to do business with good customers and you may be surprised to find much affordable with another provider.