Keeping an auto insurance policy in place demonstrates responsibility and a low risk profile. That’s why car insurance companies issue the lowest rates to drivers with continuous coverage. If your coverage streak breaks due to a missed payment or

renewal date

, you lose the confidence insurers would have had in you and will see higher premiums in the future.

Learn more:

Can you get arrested for driving without car insurance?

Policy lapses are a growing problem

A study by TransUnion found that nearly 15% of drivers let their insurance policies lapse between October 2022 and March 2023 when they were unable to find affordable coverage.1

But letting your insurance lapse isn’t a safe financial strategy. In most states, your insurance provider will notify your state’s Department of Motor Vehicles (DMV) promptly if the insurance coverage on your registered vehicle lapses. You’ll then be vulnerable to steep fines and other legal consequences, including loss of your driving privileges—and the costs will snowball quickly.

In Alabama, for example, state law authorizes a fine of $200 per day following an insurance lapse. Depending on your state’s laws, you might also need to pay reinstatement fees for your license and registration or even spend a period of time in jail.

A coverage lapse—even for a day—is always more expensive in the long run than paying your insurance premium.

What to do if your insurance has already lapsed

If your car insurance coverage has lapsed, act fast.

1. Contact your insurance company ASAP

In the case of a short lapse, you may be able to get your policy reinstated quickly through your insurer. Be ready to make a payment to get your coverage back.

2. Compare instant insurance quotes online

If your current insurer is unable or unwilling to reinstate your lapsed insurance policy, you need to get another one in place immediately. Online brokers like

Jerry

can find you

car insurance quotes

in just a few minutes, and it typically takes under 24 hours to activate a new policy.

You'll get the chance to explain why your coverage isn't active when you sign up for quotes in the Jerry app.

Be honest about your lapse. Your new insurer may ask for proof of current coverage if you claim to have an active insurance policy.

Even if your auto insurance has lapsed for just one day, do not try to drive your car. Doing so risks serious financial and legal consequences—especially if you get in an accident while uninsured. You could lose your driver’s license and even spend time in jail.

Learn more:

Here’s what happens if you’re in a car accident without insurance and at fault

How much could a 1-day lapse in insurance cost you?

Here’s the good news: a one-day car insurance lapse likely won’t cost you as much as a longer lapse.

If you can get a new policy in place within 24 hours of your old policy lapsing,

you’re unlikely to see a major rate increase

. Research shows that drivers whose insurance lapsed for less than 30 days saw an average increase of 8% in their auto insurance rates, compared to 35% for drivers whose coverage lapsed for a month or more.

Learn more:

How a car insurance lapse can impact your rates

Don’t let your insurance lapse—even for one day

Even a short coverage lapse can impact your insurance profile for years to come. Take steps now to make sure you don’t risk a lapse in the future:

Stay on top of due dates: Do you know when your next car insurance payment is due? The Jerry app keeps a log of scheduled payments and will remind you when your next bill is coming up.

Use caution with autopay: Automatic payments are convenient and could even earn you discounted rates—but the set-it-and-forget-about-it approach could cause you to miss a payment if your payment information changes or your account has insufficient funds.

Don’t cancel until you have new coverage: When buying a new policy, always schedule the start date for your new coverage on or before the cancellation date of your old policy.

FAQs

What is the lapse period for insurance?

Most insurers offer a car insurance lapse grace period, which gives policyholders a certain period to make a late payment before their policy is canceled. In most cases, this grace period is about 30 days, but your insurer may follow a different policy. If you suspect you are in a lapse grace period, contact your insurer immediately to ask about your grace period and any late fees.

Does lapse mean cancel?

“Lapsed” and “canceled” are not the same thing when it comes to car insurance. A lapsed policy has been terminated due to nonpayment or nonrenewal. A canceled policy is a policy that’s been ended for another reason, such as the insured choosing to end their coverage or the insurance company ending the coverage because the driver’s risk factors have changed.

Your auto insurance company is required to notify you when your policy is canceled, and they must send a notice in advance warning you if your policy is set to lapse due to nonpayment.

Can a lapsed insurance policy be reinstated?

If your car insurance policy lapses, you may be able to get it reinstated if you contact your insurer promptly and make a payment. But reinstatement isn’t guaranteed; your insurer may decide not to reissue your coverage if they consider you a high-risk driver due to the lapse.

How can I get a new car insurance policy?

You can get a new car insurance policy at any time through the Jerry app. It typically takes under 24 hours to compare quotes and activate your new coverage.

How does a lapse in car insurance affect the car owner?

A car insurance lapse can result in the suspension of a vehicle owner’s license and registration, along with higher rates on insurance coverage in the future. Failure to maintain auto insurance coverage can also be cause for repossession by a lender if you have an active car loan.

What happens if I’m at fault in an accident without insurance?

If you cause an accident without insurance, you will face serious legal consequences, including jail time, suspension of your license and registration, and steep fees. Those penalties increase if you cause property damage, serious injuries, or death while driving without insurance.

SOURCES

https://newsroom.transunion.com/nearly-15-of-consumers-allow-auto-insurance-coverage-to-lapse--as-shopping-fails-to-yield-lower-rates/