How to Find Car Insurance If You’ve Let Your Policy Lapse

By Jessica Bosari
After 13 years in personal and commercial insurance, Jessica Bosari now writes about personal finance, car insurance, risk management and related topics. Since 2008, she has been simplifying complex ideas through engaging articles for her readers.

How to find car insurance if you've let your policy lapse

We’re all busy people with too much on our plates, and despite our best efforts sometimes things just slip through the cracks. If you just realized that you’ve let your car insurance policy lapse, you might be nervous about what comes next. Are your rates going up? Will a new insurer even take you? It depends on why your policy lapsed, how long the lapse was, and whether you owe any money on your lapsed policy. Here’s what you can do to minimize the negative repercussions of your mistake.

First, Tell Me You’re Not Still Driving!

If your car insurance lapses, you shouldn’t keep driving. It’s just not worth the risk. In some states, you can go to jail for driving without insurance. Others have “no pay, no play” accident rules that bar you from recovering for injuries if you are driving without insurance, even when the other driver is at fault. It’s worth repeating: If you’re in an accident without insurance, all the damages are on you. You’ll have no help replacing or repairing your car. If you’re at fault, you’ll also have to pay for damage to the other car. I’m not trying to scare you, but the truth is that a bad accident can bankrupt you.

If the police pull you over and you have no insurance, they can impound your car (and no, they don’t have to give you a ride anywhere). They can leave you right there on the side of the road if they want. So don’t drive your car until you have car insurance in place again. And just so you know, your state’s registry of motor vehicles will know about the lapse. In many states, your car insurance company actually has a legal duty to tell them.

Now, Why Did It Lapse?

Maybe you were really busy and forgot to pay the bill – twice. Maybe you forgot to send in the renewal paperwork. The reason your policy lapsed can affect the outcome. Insurance companies are much less forgiving about non-payment of premium (especially if you have made claims with them) than they are about failing to send in a renewal application.

At this point, your best bet is to call your insurance company and find out what they need to reinstate your policy. If you’re lucky, they’ll just need those two months of missed premiums, or the renewal application and a deposit on next year’s premium.

Lapses Because of Cancellation or Non-Renewal

As hinted above, a lapsed policy can be the result of either a cancellation or a non-renewal. If you’ve been with the company less than 60 days, your insurer can cancel the policy for any reason. But, if you’ve been with the company longer than that, you have a right to be notified before they can cancel your policy.

Your state’s laws will specify how many days’ notice the company has to give you before they can cancel (or refuse to renew) your policy. Check with your state’s insurance department if the lapse happened out of the blue and you think your car insurance company should have given you more notice. They’ll tell you what the specific rules are where you live.

How to Fix It

If your car insurance company won’t reinstate your policy, you have to shop around for new coverage. If you have a loan on your car, you need to check with the lender. They might have already bought a “force-placed” policy for you (how thoughtful, right?). If so, you should still shop for another policy that’s cheaper.

Force-placed policies are notoriously expensive. And, they often don’t include the liability coverage you need to be a legal driver. That leaves you in the position of needing a policy for yourself, even while you pay ridiculous rates for physical damage coverage through the lender’s arranged policy marriage. At least it’s better than the other possibility–the lender could just repossess your car.

Getting New Car Insurance

Most people never notice that they’ve been getting a discount for carrying car insurance without any gaps or lapses in coverage. So, when they find a new policy after a lapse, they’re shocked to see the high premium. It’s not forever, but the higher rates will be there for at least a few months or until you switch to another car insurance carrier.

Most of the time, if the lapse lasts less than 25 or 30 days, it won’t affect your premium. That’s why it helps to shop around. One company might take away the discount for even a one-day lapse. Another might give you the discount even after a lapse of two weeks. Check with a few different insurance companies to see if you can get a policy that doesn’t penalize you for a lapse.

Making Sure It Doesn’t Happen Again

A policy lapse creates extra work and higher premiums that you could do without. Take steps to make sure a policy lapse doesn’t happen again. If it lapsed because you forgot to pay your bill, set up direct deposit payments. At most companies, this will save you a few bucks off the monthly premium and it helps you to be sure the bill is always paid on time.

If the policy lapsed because you forgot the renewal paperwork, it’s a good idea to follow my advice on renewing your car insurance. If you set a date to shop around every year, you’ll be actively looking for insurance and therefore less likely to forget about the renewal paperwork.

Remember to answer truthfully that question on the insurance application, “Do you have current car insurance?” Perhaps it is silly they ask the question at all, because they already know the answer through databases that insurance companies share. These databases report unpaid premiums, policy beginning and end dates and also auto accident information. It’s one of those irritating “I know the answer, I just want to hear you say it,” situations.

Listen, lapses happen. There’s no reason to beat yourself up about it. But you need to get your insurance back in place as soon as possible to avoid serious negative consequences. They could be as mild as paying a higher premium or as devastating as bankrupting you. Don’t take a chance on your future. Pay attention to keeping car insurance in place!