How Long Does an Insurance Lapse Stay on Your Record?
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If your car insurance has lapsed, it's important that you take out another policy as soon as possible. Not only is it wise to make sure you have coverage in the event of an emergency, but it nearly every state it's also against the law to drive without auto insurance.
Because insurance companies set their rates based on the risk you pose as an insured party, having a lapse in insurance (no matter the reason why or how long) is a huge red flag that indicates you are a high-risk driver, which will likely result in an increase to your monthly bill and deductible when you take out another policy.
What is a lapse in insurance coverage?
A lapse in car insurance coverage is any time your vehicle is left without an active insurance policy. If you rely on your car for transportation daily, you must always make it your priority to retain a car insurance policy that satisfies state requirements and keeps you protected in the event of an accident or other emergency.
Whether the lapse lasts one day, one month, or even longer, it will immediately have a negative impact on your record and begin to influence your monthly payment and deductible. The sooner you handle the issue the less negative repercussions you will face, especially if you're looking to reinstate a policy with your former provider.
How long will a lapse in insurance affect my driving record?
Each time your car insurance lapses, your driving record will be negatively impacted. The amount of time in which your record shows this discretion depends on a variety of factors, including how long your insurance lapsed and whether your previous policy was canceled or simply not renewed.
In most cases, car owners who have had a lapse in insurance experience higher rates for at least six months after reinstating their insurance policy or taking out a new one. Though the standard increase depends on your plan, provider, and personal circumstances, a lapse in insurance can raise your monthly rate by about 25% (and even higher in some cases). However, if your new coverage plan kicks in without issue, and both your driving and financial records remain unblemished, your offered rate may decrease to what it was previously over time.
How to avoid lapses in the future
The best way to avoid the negative financial repercussions that come with not having an active insurance plan is to take steps to ensure you never have a lapse in coverage. Here are some simple ways to keep your current insurance policy active.
Pay your bill on time: Nonpayment is one of the most common reasons insurance policies are canceled or not renewed. If you have trouble remembering to pay your monthly bill, consider utilizing your provider’s automatic payment function to ensure that the bill is taken care of even if it slips your mind. If you're struggling to afford your current insurance policy, you should look into taking out another plan that meets both your personal and financial needs.
Drive safer: Though this one may seem like an obvious tip, driving safely ensures that you do not become a high-risk client and will help keep your rates as low as possible. Some insurance companies, such as Allstate, even reward their customers for safe driving, so look into your policy and see if it comes with any additional benefits (aside from your own personal safety, of course).
Be aware of deadlines: In addition to knowing when your monthly bill is due, you should also know how long your policy lasts and when it is up for renewal. This will allow you the opportunity to shop for other insurance plans before the renewal deadline, should you be thinking about changing your policy in any way, and ensure that you and your insurance company are on the same page about the terms listed in your agreement. Adding a reminder on your phone or in your calendar is a great way to make sure you stay on top of important dates.
Monitor your correspondence: Whether you rely on paperless billing or opt to receive physical mail to your home, you must read all correspondence from your insurance provider as soon as it arrives, especially if you're working on filing a claim. This is the easiest way to stay up-to-date with any new expectations, requirements, or upcoming deadlines, and encourages you to nip any problem between you and your insurance in the bud before it can become a greater issue.