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. It’s better to keep your coverage—even if it’s state minimum—than to not have coverage at all.
A car insurance lapse can be intentional or accidental, but it usually comes with consequences. Whether you’re in the middle of an insurance lapse now, wondering if it’s worth the risk to enter a lapse in coverage, or you’ve had a coverage gap in your driving history, make sure you understand how you can be affected. The right car insurance plan can help you avoid a gap in coverage—or legally get you back on the road without paying serious fees.
- What is a lapse in insurance coverage?
- How can you avoid a policy lapse?
- What are the consequences of a gap in auto coverage?
- How can you get insurance after a lapse?
- Is Root the best insurance after a lapse in coverage?
What is a lapse in insurance coverage?
A car insurance policy lapse is a period of time that a registered car does not have the legal minimum amounts of car insurance coverage. A lapse can be due to cancellation from not paying, not renewing a policy when it ends, or getting dropped by the insurance company after too many accidents or tickets. Sometimes traveling abroad or simply no longer needing to drive can be a reason for a gap in coverage.
A lapse in coverage usually means you need to reinstate with the company you were previously with (if they’ll allow it) or find a new insurance company. But driving without insurance is illegal, unless you live in New Hampshire.
How can you avoid a policy lapse?
If possible, avoid a lapse in coverage in the first place.
- Pay your bills on time. Keep track of when your bills are due each month or when your car insurance policy will end so you can renew. You could also set up automatic payments (through the insurer or your bank) and not have to track as closely.
- Carry your state’s minimum insurance levels (at least). Each state requires different amounts. Liability is required in all states (except New Hampshire). The Root app makes sure you have enough legal coverage.
- Drive safely. The lower risk you pose, the more likely your insurance company will keep you as a customer.
- Get an insurance rate you can maintain. Set yourself up for success—find the right coverage amount for your needs and that you know you’ll be able to afford. Find out how to customize your coverage.
If you miss a payment or don’t renew your policy, you’ll receive a notice from your car insurance company before they drop your coverage—this is required by state law. Typically, you’ll have what’s called a grace period—often between 10 and 20 days, depending on your state—to make your payment without your policy being canceled, causing a lapse in coverage. Once you make your payment, you’ll remain on the same policy. However, if you don’t pay in time, your insurer could cancel your policy, leaving you uninsured and making it harder (and often more expensive) to get new coverage. The grace period is essentially your final notice to avoid a policy lapse.
Leased or financed car?
While Liability is the minimum amount of coverage required to drive, it only protects you by helping to pay for the injuries and property of others when you cause an accident. Because it doesn’t cover your property, your lien holder (loan company) may require you to carry more than the 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 the specific terms of your loan 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 & Property Damage) + Collision & Comprehensive. Check out all of Root’s coverage options.
What are the consequences of a gap in auto coverage?
If you cause a car accident or damage property while you are not insured, you’ll be responsible to pay for everything—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.
The expenses don’t stop there. If you’re caught driving without insurance, you could face fines up to $5,000, have your license suspended, or your car impounded. Time in prison is even possible. And your driving record will be negatively impacted, 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 consequences could be substantial. A gap in coverage 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 even insure you at all until you’ve had continuous coverage for a certain amount of time (say, 6 months).
How can you get insurance after a lapse?
If your lapse was brief, and due to a missed payment or renewal, your insurer may reinstate your policy once you pay. Some insurers charge an insurance lapse fee, so check your policy.
If you’re a Root customer and your insurance lapsed, you may still be able to reinstate. Here’s how. 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 is typically filed with your state for 3 years and proves that you’re carrying the minimum required insurance. Root customers can get an SR-22 through the app.
Is Root the best insurance after a lapse in coverage?
Root bases car insurance rates primarily on how well you drive. So if you had a lapse in coverage, but you’re still a good driver, your rate with Root could be less than traditional insurance companies who base your rate primarily on factors like driving history, credit score, and ZIP code. The # 1 factor in your Root car insurance rate is your driving.
Switching to Root is easy. And your Root proof of insurance is available immediately in the app after you purchase your policy.