A lapse in coverage increases your risk and your rates. It may be harder to find suitable and affordableÂ car insuranceÂ and may mean that you need to make some sacrifices in order to keep thoseÂ insurance premiumsÂ at an affordable level. But it’s not a complete disaster and is far from the worst thing you can have on your record.
A lapse or gap in coverage is a period in which you were not insured. You owned a car during this period but you didn’t meet the state minimum insurance requirements.
In some cases, a gap in coverage can be the result of negligence on your part. You may have allowed yourÂ insurance policyÂ to lapse without purchasing a new one or it may have been canceled because you failed to meet your payment obligations.
A lapse inÂ autoÂ insuranceÂ coverageÂ can also occur when you are deployed, sent to prison or because you simply didn’t drive during that period.Â
If you fall into the first group, your insurer will notify the Department of Motor Vehicles (DMV), telling them that yourÂ carÂ insuranceÂ policyÂ has lapsed and you are no longer insured. This will expose you to fines and a host of other problems (see our guide on the penalties imposed on uninsured drivers).
As for members of the military, they can suspend theirÂ carÂ insuranceÂ coverageÂ when they are on active duty, thus avoiding anyÂ rate increasesÂ and other problems. The same applies to students studying abroad, although in their case, they will need to contact their DMV first.
Many states require you to have continuous insurance, which means yourÂ autoÂ insuranceÂ policyÂ has not lapsed for anyÂ period of time. As soon as it lapses, your license and registration may be revoked, and you will need to pay a fee to have these reinstated. These fees, as they apply in each state, are listed below, but it’s worth noting that you may also be hit with additional court fees and fines if you are found to beÂ driving without insurance:
In addition to the fines mentioned above, you can expect yourÂ autoÂ insuranceÂ quotesÂ to be a little higher than before, although this all depends on how long the gap in coverage was.
If it was less than 4 weeks, theÂ rate increaseÂ may amount to a few extra dollars a month. If it was longer than 4 weeks, you could find yourself paying 20% to 50% more, depending on your chosenÂ carÂ insuranceÂ company.Â
The exact rate of increase will depend on the state,Â high-riskÂ status,Â driving record,Â car insuranceÂ discounts, and age of the driver. Insurance is all about measuring risk and probable claims, and anÂ insurance companyÂ will look at everything fromÂ marital statusÂ toÂ DUIÂ convictions when measuring your risk and underwriting yourÂ new policy.
In our research, we found that Progressive,Â Esurance,Â andÂ State FarmÂ offeredÂ lower ratesÂ thanÂ GEICO, even thoughÂ GEICOÂ typically tops the charts when it comes toÂ insurance costs. You should also get much lowerÂ autoÂ insuranceÂ ratesÂ with providers like USAA, providing you qualify.
To save even more, maintain a highÂ credit score, aim for thoseÂ good driverÂ discounts, and try to secureÂ bundlingÂ discounts, which are provided when you combine multiple different insurance products, such as homeowners insurance andÂ car insurance.
The car you drive is also key. AÂ new carÂ will generally lead to muchÂ higher ratesÂ than a car that is a few years old, as it will be more expensive to repair and replace.
However, a car that is a few decades old will cost more to insurance than one that is a few years old, as it may lack the safety features and anti-theft features needed to keep rates low.
How Gaps in Coverage Affect Auto Insurance Rates is a post from Pocket Your Dollars.