A lapse in auto insurance coverage—even a short one—creates problems that extend beyond just being uninsured. Understanding the consequences and knowing how to get coverage restored quickly can minimize the damage.
What Causes a Lapse?
- Missed payment: The most common cause. If you miss a payment and don't pay within the grace period, your policy cancels.
- Failed automatic payment: Insufficient funds, expired card, or closed bank account.
- Forgot to renew: If you don't respond to renewal notices, coverage ends.
- Intentional cancellation: You cancelled without securing new coverage first.
- Non-renewal by insurer: The company chose not to renew your policy.
Consequences of a Lapse
Legal Consequences
Driving without insurance is illegal in almost every state. Consequences can include:
- Fines ranging from $100 to several thousand dollars
- License suspension
- Vehicle registration suspension
- Required SR-22 filing (proof of insurance)
- Vehicle impoundment in some states
Financial Consequences
- Higher future premiums: Insurers view lapses as high-risk behavior. Expect 20-50% higher rates.
- Personal liability: If you cause an accident while uninsured, you're personally responsible for all damages.
- Reinstatement fees: Your previous insurer may charge fees to reinstate your policy.
Stop Driving Immediately
If your coverage has lapsed, do not drive until you have insurance. The risks—legal penalties and financial liability—are simply too high.
Steps to Get Reinstated
Step 1: Contact Your Previous Insurer
If your lapse just occurred, your insurer may allow reinstatement. Call them immediately and ask:
- Can my policy be reinstated?
- Is there a reinstatement fee?
- What payment is required?
- Will there be a coverage gap?
Many companies have a grace period (often 10-30 days) during which reinstatement is possible without much penalty.
Step 2: Pay What's Owed
If reinstatement is possible, you'll typically need to pay past-due amounts plus any reinstatement fee. Have payment ready when you call.
Step 3: If Reinstatement Isn't Possible
If too much time has passed or your insurer won't reinstate, you'll need a new policy. Be prepared for:
- Higher rates due to the lapse
- Questions about why coverage lapsed
- Possible requirement for full payment upfront
Step 4: Shop Multiple Companies
Different insurers handle lapses differently. Get quotes from several companies. Some are more forgiving of lapses than others.
Step 5: Handle DMV Requirements
Depending on your state and how long coverage lapsed:
- You may need to provide proof of new insurance to the DMV
- You might need to pay fines or reinstatement fees
- An SR-22 might be required
Special Situations
SR-22 Requirements
Some states require an SR-22 (proof of insurance) after a lapse. This is a form your insurer files with the state proving you have coverage. SR-22 requirements typically last 2-3 years and significantly increase premiums.
Vehicle in Storage
If your car wasn't being driven during the lapse (stored, broken down, etc.), document this. Some insurers view this more favorably. Comprehensive-only coverage is sometimes available for stored vehicles.
Military Deployment
Service members have special protections. If your lapse was due to deployment, mention this to insurers and the DMV.
Preventing Future Lapses
- Set up autopay: Automatic payments prevent missed payments from forgotten bills.
- Use calendar reminders: Set reminders before payment due dates and renewal dates.
- Keep contact info current: Make sure your insurer can reach you about payment issues.
- Monitor your bank account: Ensure sufficient funds for automatic payments.
- Don't cancel before new coverage starts: When switching insurers, overlap by at least a day.
Moving Forward
A lapse is a setback, but it's not permanent. The rate impact fades over time as you maintain continuous coverage. Focus on getting properly insured now and preventing future lapses. Most insurers look at the past 3-5 years, so every month of continuous coverage improves your situation.