March 6, 2020

What happens if your car insurance lapses?

When you have a lapse in coverage—meaning, you don’t have insurance for a period of time—you’ll be penalized by paying more for insurance later, no matter your insurance provider or whether the lapse was intentional or accidental. 

What’s more, driving without insurance can lead to fines, tickets, a suspended license, and even jail time. 

It’s better to keep your coverage—even if it’s state minimum—than not have coverage at all.

Whether your insurance is lapsed now, or you’re wondering if it’s worth it to risk a lapse in coverage, or you’ve had a coverage gap in your driving history, make sure you understand how a lapse could affect you. 

The right car insurance plan can help you avoid a gap in coverage or get you back on the road legally—without paying serious fees.

What does “lapse in coverage” mean?

An insurance lapse is a period of time when a registered car does not have the legal minimum amounts of car insurance coverage. 

A lapse can be due to cancellation from not paying your premiums, not renewing a policy when it ends, or from getting dropped by an insurance company after too many accidents or tickets. Sometimes traveling abroad or not needing to drive for a time can be the reason someone ends up with a gap in their auto insurance coverage.

A lapse in coverage usually means you need to reinstate with the company you were previously with, if possible, or find a new insurance company. But remember, driving without insurance is illegal in most states.

How can you avoid a policy lapse?

If possible, it’s best to avoid a coverage lapse in the first place. 

• Pay your car insurance on time. In addition to keeping track of when your car insurance bills are due each month, keep an eye on when your policy will end, so you’re ready to renew. Consider setting up automatic payments through your insurer or bank.

• Carry at least your state’s minimum insurance levels. Each state requires different minimums. Liability is required in all states except New Hampshire. The Root app makes sure you have legal coverage that meets your state’s minimums.

• Drive safely. The lower the perceived risk to insure you, the more likely your insurance company will keep you as a customer.

• Get an insurance rate you can maintain. Find the right coverage amount for your needs and that you know you can afford. We can help you customize your coverage.

Is your car leased or financed?

Liability coverage is the minimum amount of coverage required to drive, but it only covers the injuries and property of others when you cause an accident. 

Because Liability doesn’t cover your car, your lien holder (loan company) could require you to carry more than the state minimum. If your insurance lapses on a financed or leased car, your lien holder could repossess your car or purchase a new policy that you’ll have to pay at a much higher rate. Check your loan terms before allowing your coverage to lapse.

Typically, the minimum required coverage for leased or financed cars is referred to as “full coverage.” This is made up of Liability (Bodily Injury and Property Damage), plus Collision and Comprehensive coverages. Check out all of Root’s coverage options.

Are there other consequences for an insurance lapse?

If you cause a car accident or damage property while you’re not insured, you’ll be responsible for paying all of the expenses involved, including paying for the other party’s property and medical bills, your car, and your own medical bills. These expenses can really add up, and, if you can’t afford them upfront, they could be deducted from your future wages.

In addition, if you’re caught driving without insurance, you could face an insurance lapse fine for up to $5,000, have your license suspended, or your car impounded. Jail time is even possible. Your driving record will be negatively impacted, as well, which will raise your insurance rates when you do get coverage again.

Even if you don’t drive your car during a lapse in coverage, the financial consequences could be significant. A coverage gap on your record makes it look like you’re a high-risk driver. Insurance companies could charge you a higher premium to make up for that risk, depending on your state. Some companies won’t insure you at all until you’ve had continuous coverage for a certain amount of time.

How do you get car insurance after a lapse?

If your lapse was brief and due to a missed payment or renewal, your auto insurer may reinstate your policy once you pay. Some companies charge an insurance lapse fee, so check your policy.

If you’re a Root Insurance customer and your car insurance lapsed, you may still be able to reinstate. And there’s no additional fee to reinstate with Root.

It’s going to be harder and more expensive to get reinsured after a lapse. Once you do find a company to insure you, your state may require you to file an SR-22. It’s typically filed with your state for three years and proves that you’re carrying the minimum required insurance. Root customers can get an SR-22 through the Root app.

If you’ve had an insurance lapse, Root might be a good fit. 

Root bases car insurance rates on how well you drive. 

So, if you’ve had a lapse in coverage, but you’re still a good driver, your rate with Root could be less than your rate with a traditional insurer. Most car insurance companies base your rate primarily on factors like driving history, credit score, and ZIP code. But, at Root, the No. 1 factor in your car insurance rate is your test drive score.

Switching to Root is easy. And your Root proof of insurance is available immediately in the app after you purchase your policy.