What Happens if My Car Insurance Lapses?

What Happens if You Let Your Car Insurance Lapse?

If your car insurance lapses, consequences could include fines and other legal issues. Most states have minimum car insurance requirements. Depending on where you live, you may have to carry several types of car insurance and maintain minimum coverage limits. Your auto loan lender, or lessor if you're leasing, will likely have additional requirements.

If your policy lapses and you're caught driving without insurance, you could find yourself in legal hot water. In some cases, you could even lose your car. Consequences vary from state to state and whether it's your first offense, but here's an overview of potential outcomes:

• A fine ranging anywhere from $50 to $5,000 or more
• License or registration suspension
• Vehicle impoundment
• A misdemeanor or felony conviction
• Jail time that lasts 10 days to a year
• SR-22 requirement, which is a court-ordered form you'll need to file with your state to prove that you have enough car insurance
• Insurance rate increase
• Repossession of your car if you have a loan or lease
• Full liability for damages or injuries you cause while driving uninsured

Learn more: What Happens if You Drive Without Insurance?

What to Do if Your Car Insurance Lapses

Car insurance policies usually renew automatically every six or 12 months. You'll likely receive a message from your insurance company beforehand to give you a heads-up and let you know if your rate is changing. But if there are any red flags with your driving record, they may choose not to renew your policy. This can also happen if the insurer stops providing coverage in your state. Either way, you'll want to find a new policy to prevent a gap in your coverage.

If your policy expires, most insurers will offer a grace period—usually 10 to 20 days—to pay your premium and keep your policy intact.

Tip: To avoid a car insurance lapse, set up autopay, make sure your address is up to date and contact your insurer if you think you'll miss a payment.

How to Get a New Policy After an Insurance Lapse

In the event of a car insurance lapse, you'll need to get a new policy. Keep in mind that you might be quoted higher rates if you've had a previous lapse—especially if it resulted in any of the consequences mentioned above. Here's how to get car insurance in a few simple steps.

1. Clarify your coverage requirements. Make sure you understand what coverage is required in your state. Your state's department of motor vehicles (DMV) website is a good place to start. Also consider any requirements set by your auto loan lender or lessor. For example, they may require you to carry collision and comprehensive insurance.
2. Think about your risk tolerance and finances. Beyond what's required, ask yourself how much risk you're comfortable assuming as a driver. When comparing quotes, your financial situation is equally important. Can you afford your insurance premium, and do you have enough cash savings to cover your deductible if you need to file a claim? If not, you may need to adjust your coverage or modify your deductible.
3. Shop around. Gathering car insurance quotes allows you to compare different insurers and decide which one is right for you. Look at premiums, deductible amounts, coverage limits and any available discounts.
4. Complete an application. Once you've chosen a new car insurance policy, you can formally apply with the insurance carrier. You'll need the make, model and year of your car, along with the vehicle identification number (VIN), current mileage, safety features, anti-theft features and other vehicle details. You'll also need to provide some basic personal information.
5. Pay your first premium. Several factors will determine your car insurance premium. That includes where you live, the type of car you have, your driving record and your level of coverage. Some states will also look at a version of your credit score when calculating your premium.

Learn more: How to Get the Best Car Insurance

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What to Do if You Can't Afford Car Insurance

If your premium is straining your budget, you can look for ways to make car insurance more affordable. Here are some possible courses of action if you can't afford your car insurance:

• Reduce your coverage while still maintaining the minimum requirements set by your state and auto loan lender or lessor.
• Eliminate optional coverage, which might include rental car reimbursement, mechanical breakdown insurance or gap insurance.
• Look for discounts, like bundling your home and auto insurance or driving less to secure a low-mileage discount.
• Increase your deductible, which will likely reduce your premium.
• Shop for a new policy with a new car insurance company.

Learn more: How to Lower Your Car Insurance

The Bottom Line

A car insurance lapse is less than ideal, but acting quickly to secure a new policy can ensure that you're adequately covered. It's also a good idea to set up automatic renewal with your insurer to avoid any hiccups in the future.

Depending on where you live, your credit health could affect your car insurance rates. You can get your credit report and FICO^® Score^☉ from Experian.