Your Auto Insurance Lapsed. Now What?

We’ve all had those days where we feel disorganized, disoriented, or downright forgetful. In the usual chaos of life, it’s normal to forget to complete a task every now and again. Maybe you forgot to pick up milk or toilet paper on your way home from work, or forgot to pay a bill. Oops! That was your auto insurance bill, and it was due a few days ago. Now what?

Here’s how to deal with lapses in your auto insurance coverage.

First, take a deep breath. In reality, a payment that is a day or two late probably won’t be enough to cancel your policy. However, if your payment is significantly overdue or you forgot to renew your coverage, your insurance company might cancel your policy. Even though you still have a registered vehicle, you may no longer have insurance for it. This is called a lapse in car insurance. They can happen for many reasons (missed payments or renewal, you stopped driving, you were deployed, etc.) but you will need to reinstate coverage before you drive again. Fortunately, this is a pretty painless process. Here are the steps you’ll need to take.

Call your insurance company.

The first step you need to take (after calming down) is to call the insurance company through which you previously held coverage. This way, you can find out how long it’s actually been since you last had coverage.

Ask whether your insurance company can reinstate your policy.

If your insurance company has already canceled your policy, ask whether they are able to reinstate it. If your policy can be reinstated, it will likely show as continuous coverage. You’ll simply need to pay any past due balance.

Get a new policy if your old one can’t be reinstated.

If your old company can’t reinstate your policy, you’ll still need coverage before you can drive. However, just know that a lapse in coverage may cause your rates to go up. Despite that, most companies can ensure your coverage begins right away so you’ll be ready to get back on the road in no time.

What happens if you don’t reinstate your insurance?

Insurance is a must-have. In fact, it’s mandatory to carry insurance in every state except New Hampshire. If you still have a registered vehicle but your insurance provider has canceled your policy, they’ll notify the DMV. You may then receive fines or other penalties, which vary by state. For example, you’ll pay a $50 penalty in North Carolina for letting your insurance lapse. In New York, though, you’ll receive a fine of up to $1,500, have your license and registration revoked for a year, and must pay a $750 reinstatement fee.

Unfortunately, insurance companies may hike your rates after you have a lapse in coverage, because they consider you a high-risk driver. You may only see a small increase if you’ve gone without coverage for less than 30 days. After 30 days, though, your rates will likely increase significantly. The good news is that you can always use comparison tools like ours to make sure you’re getting the best rates.