What Happens When Car Insurance Lapses?
A car insurance lapse can result in a rate increase of up to 25%.
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Written byAlani Asis
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3 years of content writing
Bylines with leading financial publications
Alani is a freelance writer specializing in personal finance. She aims to make complex topics more approachable through fun, digestible content.
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Edited byAshley Cox
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7+ years in content creation and management
5+ years in insurance and personal finance content
Ashley is a seasoned personal finance editor who’s produced a variety of digital content, including insurance, credit cards, mortgages, and consumer lending products.
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Updated November 21, 2024
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A lapse in your car insurance can have serious legal and financial consequences — including difficulty getting a new policy and much higher rates when you do secure coverage.
Nearly every state requires drivers to have at least a minimum amount of liability insurance. Driving during a car insurance lapse, or the period of time you’re uninsured, can result in fines, penalties, late fees, interest charges, and even revocation of your vehicle’s registration and your driver’s license. If you realize you have no coverage, you should act quickly to reinstate your policy or secure a new one.
Here’s what you need to know about how lapses in your car insurance can affect your rates and what you should do if your coverage lapses.
Quick Facts
One in eight drivers was uninsured in 2019, according to data from the Insurance Research Council.[1]
Currently, just two states – New Hampshire and Virginia – allow drivers to opt out of buying minimum coverage. But Virginia’s laws are changing, and all drivers will need to be insured as of July 1, 2024.
You can prevent a lapse in insurance by carrying coverage at all times.
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What is a car insurance lapse?
A car insurance lapse is when you’re uninsured after your car insurance policy ends, often because you didn’t pay your premiums or your insurer canceled your policy.
For example, say your insurance company terminates your coverage because you’ve missed multiple payments. You’ll experience a lapse in coverage starting on the end date of your former policy.
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Can You Reinstate a Canceled Car Insurance Policy?
Car insurance grace periods: What to know
A car insurance grace period refers to the period of time your insurer allows you to make up for a missed payment. While the length of grace periods varies by state law, you usually have 10 to 20 days after your payment due date to pay your car insurance premiums and prevent your policy from lapsing.
During the car insurance grace period, it’s a good idea to pay your policy immediately so that your insurer won’t cancel your coverage.
What to do when your car insurance lapses
If you realize your car insurance coverage has lapsed, take action immediately to avoid the financial and legal consequences of being uninsured.
Don’t drive while uninsured. Driving an uninsured vehicle may result in hefty fines or license suspensions. Also, if you’re in a car accident without coverage, you’re on the hook for paying medical expenses and property damages associated with the incident.
Contact your car insurance company. Find out why your auto insurance coverage lapsed and if you’re still within the grace period. If you’re still in your grace period or you made the payment, tell your auto insurance company so it can rectify the error and reactivate your policy.
See if your insurer will reinstate your policy. If you’re outside the grace period, ask your insurer if it can reinstate your policy. Your insurer may agree to reactivate your coverage if it hasn’t been too long. Just keep in mind that you may have to pay late fees for reinstatement.
Get a new policy. If your insurer refuses to continue your coverage, search for a new car insurance company immediately.
Cheapest car insurance companies after a lapse
Drivers who experience a lapse in insurance may see an increase in their rates. If this is you, you’re not out of luck. These are the cheapest auto insurance companies after car insurance lapses and their average monthly costs, according to Insurify data.
Insurance Company ▲▼ | Full Coverage ▲▼ | Liability Only ▲▼ | IQ Score The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores. ▲▼ |
|---|---|---|---|
| Hugo | N/A | $227 | 7.0 |
| USAA | $99 | $45 | 9.4 |
| State Farm | $119 | $54 | 9.3 |
| GEICO | $119 | $54 | 9.0 |
| Safeco | $143 | $82 | 8.3 |
Disclaimer: Table data sourced from real-time quotes from Insurify's 50-plus partner insurance providers and quote estimates from Quadrant Information Services. Actual quotes may vary based on the policy buyer's unique driver profile.
Our editorial team spent more than 350 hours developing the Insurify Quality (IQ) Score and scoring insurance companies. The IQ Score objectively analyzes and calculates a score for insurers using more than 15 crucial criteria. The team weighted criteria by importance to the consumer — factors such as customer reviews and affordability influence the score more than availability and third-party ratings.
We rate each company on a 1 to 10 scale based on five categories: financial ratings, customer satisfaction, affordability, customer support and transparency, and availability. Insurify updates ratings once a year or as more recent information becomes available.
- Third-party financial ratings: Insurify uses data from AM Best, S&P, Moody’s, and more to compare insurance companies’ credit and ability to pay out future claims.
- Customer satisfaction: To calculate this score, Insurify analyzed more than 28,000 customer reviews across 155 car insurance companies. We also consider third-party ratings from J.D. Power, the National Association of Insurance Commissioners, and Trustpilot.
- Affordability: Our data scientists analyzed more than 90 million real-time auto insurance rates from our partners across the U.S., as well as available discounts, to calculate an affordability score.
- Customer support and transparency: This measures coverage options, ease of claims filing, and the insurer's transparency surrounding discounts, coverages, and claims process.
- Availability and reach: Insurify scores availability and reach by identifying the number of states in which insurers offer coverage and company size by market share.
How a lapse affects car insurance
If you have a lapse in your car insurance coverage, insurers may classify you as a higher-risk driver, even if you have a good driving record. As a result, you may see your rates rise, and companies may even refuse to insure you.
If you drive without insurance, you may have to find an insurer who will file an SR-22 certificate or that offers high-risk insurance, which can be costly.
How a coverage lapse affects car insurance rates
A car insurance lapse can cause minor or significant insurance premium increases. For example, Hugo drivers see an average increase of 7%, while Travelers drivers experience a 25% increase, according to rate data from Insurify.
Insurance Company ▲▼ | Average Quote: No Lapse ▲▼ | Average Quote: With Lapse ▲▼ |
|---|---|---|
| Hugo | $60 | $64 |
| State Farm | $79 | $83 |
| Safeco | $87 | $97 |
| Progressive | $123 | $139 |
| Travelers | $142 | $177 |
Disclaimer: Table data sourced from real-time quotes from Insurify's 50-plus partner insurance providers and quote estimates from Quadrant Information Services. Actual quotes may vary based on the policy buyer's unique driver profile.
Recent quotes for other Insurify users
Drivers using Insurify have found quotes as cheap as $42/mo for liability only and $60/mo for full coverage.
*Quotes generated for Insurify users within the last 10 days. Last updated on November 21, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.
Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from November 21, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.
*Quotes generated for Insurify users within the last 10 days. Last updated on November 21, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.
Rates shown are real-time Insurify user quotes from 100+ insurance companies and Quadrant Information Services data. Insurify’s algorithm excludes anomalous quotes and anonymizes personal details, then displays refined quotes by price, date, and insurer popularity up to 10 days ago from November 21, 2024. Actual quotes may vary based on the policy buyer’s unique driver profile.
Other effects of a car insurance lapse
Besides causing you to pay high insurance rates, a car insurance lapse may have other adverse outcomes, including:
Legal consequences: Car insurance is legally required in nearly every state. If you’re caught driving without insurance, you may be subject to fines and license suspension.
Financial consequences: If you drive without car insurance and cause an accident, you’ll be responsible for paying for the other party’s medical expenses, car repairs, and any legal expenses.
Repossession: If you have an outstanding loan or lease on your vehicle, your lender can repossess your car if you fail to carry the required car insurance.
Good to Know
Leasing companies and auto lenders not only require you to carry insurance on your vehicle at all times, they typically require full coverage. That’s because a state’s minimum liability coverage only pays for damages to another vehicle in an accident you cause. Only full coverage pays for damage to your own vehicle.
How to avoid a car insurance lapse
Car insurance can be a costly expense in your budget. But in nearly every state, it’s illegal to drive while uninsured.[2] Here are some things you can do to avoid a lapse in your car insurance coverage:
Put your insurance payments on auto pay. If you often forget to make payments, consider putting your bill on auto pay. Some insurance companies may even offer a discount for utilizing their auto pay feature.
Switch to liability-only coverage. Continuing your insurance coverage will help you avoid rate hikes. For example, if you’re leaving the country for a while and keeping your car in storage, consider switching to a liability-only policy and lowering your coverage limits. You’ll often pay a significantly lower rate than for a full-coverage policy while preventing a lapse in your insurance.
Consider usage-based insurance. You can opt for usage-based or pay-per-mile insurance, which may be cheaper than a standard insurance policy if you drive infrequently. With this type of insurance, you’ll pay for the miles you drive, plus a usually low base rate.
Shop around. Comparing quotes for auto insurance from at least three different insurers is the best way to find coverage that meets your needs.
Other Ways to Avoid an Insurance Lapse
Say you don’t have a car but will continue to carry your driver’s license. Non-owner car insurance, which comes with your state’s minimum liability coverage, can be useful if you regularly borrow or rent vehicles.
Lapse in insurance FAQs
If you’re trying to avoid a lapse in your car insurance coverage, this additional information may help.
What happens if you have an accident while your car insurance is lapsed?
If you’re at fault in a car accident while driving uninsured, you’ll likely be responsible for any resulting property damage and injuries. Carrying insurance is the best way to mitigate the financial hardship of an at-fault collision.
How long does a lapse in insurance stay on your record?
A lapse in your car insurance can stay on your record for three to five years. However, this varies by state.
Can an insurer deny coverage due to a lapse?
Yes, insurance companies can deny applicants due to a lapse in coverage.
Does a lapse in car insurance affect your credit score?
No, a lapse in car insurance doesn’t affect your credit score. However, if you don’t pay your insurance premiums, your bill may land in collections, which can hurt your credit score if it goes unpaid.
What’s the difference between a lapse and a cancellation?
A lapse in insurance is the window of time you don’t have insurance coverage, usually due to missed payment. A cancellation occurs when an insurance company terminates your policy due to a missed payment, misrepresentation, or a high volume of claims. A cancellation can lead to a lapse in coverage if you don’t take steps to find new coverage before your current policy ends.
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Sources
- Insurance Research Council. "One in Eight Drivers Uninsured."
- National Association of Insurance Commissioners. "Uninsured Motorists."
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Alani Asis
Alani Asis is a personal finance freelance writer with nearly three years of experience in content creation. She has landed bylines with leading publications and brands like Insider, Fortune, LendingTree, and more. Alani aims to make personal finance approachable through fun, relatable, and digestible content.
7+ years in content creation and management
5+ years in insurance and personal finance content
Ashley is a seasoned personal finance editor who’s produced a variety of digital content, including insurance, credit cards, mortgages, and consumer lending products.
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