Car Insurance with a Lapse in Coverage

How to find the cheapest car insurance coverage after a lapse in coverage.

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How to get car insurance after a coverage lapse

The average price difference between an insurance policy for a driver with five consecutive years of coverage history and a driver with no recent auto insurance record is $216 per year.

There are no positive consequences of a lapse in auto insurance coverage. Depending on your circumstances, a lapse of car insurance can result inhigher premiums, license suspension, tickets,or a lack of coverage in the event of an accidentFor an insurance company, covering a client with a lapse in coverage is riskier. To an insurer, you've shown either an inability to maintain your coverage, or you've chosen to drive while uninsured. However, some options exist for finding car insurance after a lapse in coverage. Let’s explore the ins and outs of allowing your car insurance policy to lapse.

 

Car insurance after a loss of coverage:
  1. What happens when car insurance lapses?
  2. Why is car insurance so expensive after a lapse?
  3. Reinstatement after a lapse in coverage
  4. Cheapest companies after a lapse in insurance coverage
  5. What happens if you have a car accident with a lapse?




 

What is a lapse in car insurance?

A lapse in auto insurance coverage simply means you have been uninsured for a period of at least 30 to 60 days. Your insurance may lapse for any of a few reasons. Below are some common reasons a car insurance policy could be voided.

  • Missed payment(s)
  • Policy non-renewal
  • Policy cancellation (by the insurance company)

Is there a grace period for a car insurance coverage lapse?

This varies by the insurance company and is a good question to ask when you're shopping for a policy. Depending on the duration of the lapse — and the reason for the interruption — the insurance company might reinstate the policy. For example, if your policy expired by a single day, your insurance might decide to reinstate it. If a policy is canceled because of a missed payment that is rectified soon thereafter, the company will likely forgive the error and reinstate the policy  — but for a fee). 

 


 

Car insurance after a coverage lapse

There are a few reasons getting car insurance after a lapse in coverage is expensive and difficult. The primary reason is the additional risk posed by insuring a previously uninsured driver. Unless you’re a newly licensed driver, having a driving history without an insurance history is considered a sign of potential risk — similar to having a bad driving record. Below are average auto insurance rates based on the duration of car insurance history and common coverage levels.

AVERAGE ANNUAL PREMIUM — NO INSURANCE HISTORY
Insurance HistoryCar Insurance Premium$ Difference vs. No Insurance History
None$1,656
6 Months — State Minimum Bodily Injury Limit$1,614$42
6 Months — 50-100 Bodily Injury Limit$1,539$117
1 Year — State Minimum Bodily Injury Limit$1,583$73
1 Year — 50-100 Bodily Injury Limit$1,507$149
3 Years — State Minimum Bodily Injury Limit$1,547$109
3 Years — 50-100 Bodily Injury Limit$1,470$187
5 Years — State Minimum Bodily Injury Limit$1,510$147
5 Years — 50-100 Bodily Injury Limit$1,441$216

 

As you can see, the longer you carry car insurance and the higher coverage level you maintain, the lower your rate will be. A history of minimal car insurance coverage is another indicator of risk. Historical data shows drivers who carry lower levels of coverage tend to file more claims than do drivers with higher liability limits.

 

AVERAGE ANNUAL PREMIUM — BY COVERAGE LEVEL
Insurance HistoryCar Insurance Premium$ Difference vs. No Insurance History
5 Years — State Minimum Bodily Injury Limit$1,510$147
5 Years — 50-100 Bodily Injury Limit$1,441$216
5 Years — 100-300 Bodily Injury Limit$1,405$252

 

By maintaining higher levels of coverage for five years, you can save $252 per year on your next insurance policy.

Another thing to keep in mind is eligibility. Certain companies will not sell a policy to drivers who haven't maintained continuous coverage for a certain duration. This relates to the risk associated with limited-history insurance clients. For instance, Farmers will not write a policy for a driver without continuous coverage for at least six months. This does not include newly licensed drivers.

 


 

Can you reinstate an insurance policy to avoid a lapse in coverage?

Whether you can avoid a lapse in coverage by reinstating coverage depends on the insurance company's regulations. If your insurer cancels your policy due to non-payment, you might be able to reinstate your policy if you make a payment and pay a reinstatement fee. Reinstating a canceled policy can help you avoid a lapse in coverage.

If the lapse exceeds a few days, the ramifications may be more serious. Some insurance companies will allow policy reinstatement after a longer period after this time frame. Others might issue an entirely new policy. Other providers won’t reinstate the policy, forcing the driver to look elsewhere for insurance.

If you learn your policy has been canceled, call your insurance company or sign into your account online to learn more about recommended next steps. 

 


 

Cheapest car insurance companies after a lapse in coverage

Now that we’ve outlined why it's difficult to find car insurance after a lapse in coverage, let’s look at rates from popular providers. Using the methodology outlined here, we determined USAA and Nationwide to be the cheapest companies for a driver with a lapse in coverage or limited insurance history.

 

AVERAGE ANNUAL PREMIUM — NO INSURANCE HISTORY
Insurance ProviderAverage Annual Premium
Allstate$5,272
Farmers$4,981
GEICO$2,935
Liberty Mutual$4,518
MetLife$5,086
Nationwide$2,575
Progressive$6,460
State Farm$4,468
USAA$2,566

 


 

How to handle a car accident after a coverage lapse

If you’ve been in a car accident and later realize your car insurance has lapsed, there’s no easy fix. Let’s review a few example scenarios.

 

Your insurance lapsed for a few days but was soon reinstated — are you covered for an accident that occurred during the lapse?

If your coverage lapsed on Tuesday, and you had an accident on Thursday, your insurance company may allow you to reinstate your policy, but it’s very unlikely they will provide coverage for your accident. If you lie and say the accident happened after you were insured again, you’re committing insurance fraud. Having a reinstated policy and immediately filing a claim will be suspicious to your insurance company’s claims department and they will most likely investigate it.

 

Your coverage lapsed but the at-fault driver has insurance

Your lack of insurance should not affect your ability to receive compensation after a not-at-fault accident. If it is clearly the other driver’s fault, you should contact their insurance company and begin the claims process.

 

Your insurance policy lapsed and fault is unclear

The only people who can determine fault are claims adjusters. So, if responsibility for the incident is unclear, not having a claims adjuster on your side can be difficult. Insurance companies are going to try to avoid claims. Without an insurance company to back you, you could be stuck footing the bill.

If this happens to you, your best bet is to seek legal advice.

 

Your insurance coverage has lapsed and you’re the at-fault driver

This is the worst-case scenario. If you’re uninsured and cause property or bodily injury damage to someone else, you’re responsible for those damages. If you’re unable to pay, you can have your assets seized and face legal action. Depending on the nature of the accident, you can also be ticketed, have your license suspended, or have your vehicle towed.

Bottom line: if you’re currently uninsured, get insurance now. If it’s been a few days since your insurance lapsed, your best bet is to call your current provider and see if you can get your coverage reinstated. If you’re requiring an entirely new quote, enter your zip code below to see rates from over a hundred local and national providers across the U.S.

 

Find the perfect policy for you today!

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Additional resources

When purchasing auto insurance after a lapse in coverage, make a note to shop around again after your first six months. As you develop your insurance history, your rate will improve.

For more information relating to car insurance, see our additional information below.