A car insurance lapse occurs when there’s a gap in your insurance coverage for any reason. Not only does a coverage lapse leave you unprotected in the event of an accident, but it can also lead to fines, license suspension, and higher insurance rates.
Car insurance lapses can cause your rates to increase by 25%
Car insurance lapses can happen for a variety of reasons—perhaps you haven’t owned a vehicle for a long time, or you missed a payment on your policy by mistake. Regardless of the reason for your lapse, not having the proper coverage in place can lead to an array of consequences.
On average, uninsured high-risk drivers who have had a lapse in car insurance see a rate increase of 25%. However, the impact to your insurance will depend mainly on the period of time you’ve been without coverage.
- Lapses under 30 days: Approximately 8-9% raise in rates
- Lapses over 30 days: Approximately 35-50% raise in rates
Your insurance company also has a large role in how much you’ll pay for car insurance after a lapse. Most auto insurance providers see drivers as higher risk following an insurance lapse, so they’ll charge higher rates to drivers who have gaps in their recent coverage history.
To help you get a better idea of what you might pay for car insurance after a coverage lapse, our experts analyzed thousands of insurance policies purchased by Jerry drivers. Here’s how average rates changed for some of the nation’s largest insurance companies:
| Insurance company | Average coverage cost | Average coverage cost w/ lapse | Total cost increase (%) |
|---|---|---|---|
| AAA | $160 | $208 | 30% |
| Allstate | $142 | $190 | 34% |
| Clearcover | $98 | $118 | 20% |
| Direct Auto | $167 | $186 | 11% |
| National General | $148 | $164 | 11% |
| Nationwide | $108 | $136 | 26% |
| Progressive | $128 | $159 | 24% |
| Safeco | $118 | $145 | 23% |
| State Auto | $110 | $153 | 39% |
| Travelers | $100 | $140 | 40% |
Other ways car insurance lapses can impact you
You won’t have coverage
If you get into a car accident without insurance, you could be left responsible for thousands of dollars in vehicle repairs and medical bills. This is particularly true for an at-fault accident—without liability insurance, you’ll be financially responsible for property damages or injuries suffered by the other driver.
Is there a car insurance lapse grace period? There typically isn’t a car insurance lapse grace period, but most insurance companies do offer a grace period if you miss a payment before they completely cancel your policy. This period might be as little as one day or as long as 30 days, depending on your provider.
You’ll face state consequences
Driving without car insurance is illegal in almost every state in the US. If you drive without at least liability coverage on your motor vehicle, you could face a suspended driver’s license, hefty fees, and/or jail time. Carrying at least the state minimum coverage will ensure that you’re compliant with state law.
How to prevent a car insurance lapse
With all these potential consequences in mind, let’s take a look at a couple of ways to prevent a car insurance lapse.
- Give yourself reminders about important tasks: Don’t let yourself forget to pay your car insurance until it’s too late! Nonpayment is regarded as a lapse in coverage by most insurers. Set reminders for yourself so you know when your payments are due, or sign up for automatic payments.
- Be mindful when scheduling your policy’s start and end dates: When switching between policies, it’s easy to have an accidental lapse in coverage by scheduling one to end too early or the other to start too late. Be sure that your old policy is scheduled to end on the same day that your new policy starts to avoid any accidental gaps in coverage.
- Purchase a car insurance policy in your budget: For many drivers, a car insurance lapse occurs because they are unable to pay their car insurance premiums. Before deciding on a policy, use a comparison app like Jerry to get quotes from multiple providers to ensure that you’re getting the best rates.
Reinstating a lapsed policy
In some cases, you may be able to contact your insurance provider and reinstate your car insurance policy after a lapse in coverage. Your eligibility for reinstatement will depend on how long the insurance lapse lasted:
- If you contact your insurer less than 30 days after your lapse, you may be able to reinstate your policy with an average rate increase of 8-9%.
- If you contact your insurer between 30 and 60 days after a lapse, you may be able to reinstate your policy with an average rate increase of 35-50%.
- If your insurance lapse lasted for 60 days or more, you likely will not be eligible for reinstatement. In this case, you’ll need to start looking for a new car insurance provider.
Insurers may also take your payment history into account. If you’ve been with your current provider for many years without a missed payment, for example, they’re more likely to be forgiving of an insurance lapse.
The best ways to lower your rates after a car insurance lapse
1. Shop around with a trusted insurance agent or broker
Shopping for car insurance can help you find lower rates following a lapse. For a quick, easy shopping experience, use an insurance broker like Jerry to get quotes from dozens of top providers in a matter of minutes.
With Jerry, drivers can compare customized quotes from some of the top providers in their area. Each of these results will be tailored to your specific driver profile, meaning savings may be available, even with a lapse on your record.
Keep in mind that while most Jerry users finding savings using the app, not all drivers will have the same results.
2. Ask your provider about car insurance discounts
Many car insurance providers offer car insurance discounts to drivers for things like a good driving record, a telematics device, or even good grades. Ask your provider about car insurance discount options available to you.
3. Raise your car insurance deductible
A higher car insurance deductible can result in lower car insurance rates. Just remember that you’ll still be responsible for paying your deductible out-of-pocket after an accident, so you should never raise it higher than you can afford.
4. Bundle your home and auto insurance
Bundling car insurance with other policies, such as homeowners’ insurance or renters insurance, can result in savings between 15-25% based on your chosen provider. Ask your insurance provider about bundling to see if it’s worth it for you.
FAQ
-
Will you get in legal trouble for a car insurance lapse?
-
Does a car insurance lapse affect your credit?
-
How can you avoid a lapsed car insurance policy?
Source
- https://www.chase.com/personal/credit-cards/education/build-credit/does-paying-car-insurance-build-credit-history#:~:text=The%20short%20answer%20is%20no,be%20read%20by%20future%20lenders. ↩︎
Liz Jenson is an insurance writer who specializes in general automotive and insurance topics. Liz’s mission is to produce informative and useful content to help car owners make smart choices when buying cars and car insurance. Since joining Jerry in 2021, Liz has written nearly 4,000 long- and short-form articles on topics including state-specific insurance recommendations, common car insurance questions, and deep dives into vehicle model details. Before they came to Jerry, Liz was a full-time student at Indiana University, Bloomington working on a double major in English and French.
Kianna Walpole is an insurance writer and editor with a comprehensive background in consumer behavior and online publishing. With experience in car insurance, maintenance, and repair, she is dedicated to building informative content that helps customers reduce costs while achieving the best service. Prior to joining the Jerry editorial team, Kianna worked as a junior editor in the content marketing industry, using consumer data and key insights to create and edit content for an array of large-scale clients in the real estate, cybersecurity, and healthcare industries.
