My car insurance lapsed and my car is totaled. What should I do?

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Joel Ohman
Founder, CFP®

UPDATED: Mar 2, 2020

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If your car insurance has lapsed and your car is totaled, then you have a couple of issues you need to deal with before deciding if switching auto insurance companies is the right move.

What you choose to do will depend on when the lapse in coverage occurred in relation to the accident and on the insurance company’s policy about customers who let their policy lapse. The decision about whether to switch companies can be made after you have contacted the insurance company to discuss the matter.

Driving without insurance is illegal in most parts of the United States. Facing this type of charge means that a driver may be fined and/or lose his or her license for a time. Even a first-time offense means that you may lose driving privileges for up to a year, depending on the jurisdiction. You will have to deal with the criminal charges, along with whatever your insurance company’s practice is when a policy lapses.

No matter what you decide to do after reading this FAQ you should compare all of your options by entering your zip code in the free insurance comparison tool above and comparing car insurance quotes online.

Lapse in Auto Insurance Coverage


With some insurance companies, being even a day late in paying the policy premium may result in the policy cancellation. Others will allow a customer to bring their premium payments up to date by making up the one they missed and making their next one as usual.

To find out what your insurance company’s practice is when a customer misses a payment, contact the Customer Service department right away.

A representative will explain how the insurance company handles this situation. If the missed payment was due to an oversight or a temporary financial difficulty, pay the company by online banking or by phone as soon as possible.

You will still need to contact the company to discuss the matter, but making an effort to pay right away will only help if you want to get your policy reinstated.

Total Loss and Car Insurance

If the accident occurred before the lapse in coverage, then your insurance company should pay out on the policy. In the case of a total loss, the company will only pay up to the cash value on the vehicle. The policy deductible is subtracted from the amount of the check.

In a situation where the loss occurred after the lapse in coverage, the insurance company will not pay. Even if the company will reinstate your policy, any loss that occurs from the date the policy lapsed to the date coverage was resumed is not covered.

If you choose to replace the vehicle, you will be doing so without any insurance proceeds.

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Deciding Whether to Switch Car Insurance Companies

If the insurance company cancels the policy because coverage has lapsed, you will need to find another company willing to extend coverage to your next vehicle. You will be required to disclose to the new company the fact that you lost your insurance coverage.

Some insurers will not extend coverage to a customer whose policy has lapsed, while others will agree to provide protection but charge more in premiums. The higher rate is due to the increased level of risk that you now present.

If you find a company willing to extend coverage, you may not have the option of paying for your coverage on a monthly basis. Instead, the company may insist on being paid annually or semi-annually.

Once you have established a good payment record with the insurer, the rules about making payments may be relaxed so that you can go back to paying your car insurance premiums monthly.

If your insurance company refuses to reinstate your insurance policy, look at several options before making a final decision. Each insurance company has unique criteria that underwriters use to determine the level of risk that an applicant presents.

Some insurers have a blanket policy where they don’t cover drivers whose insurance coverage has lapsed under any circumstances. Certain companies are more forgiving than others; the way to find these insurers is to take some time to shop around.

When asking for a quote for coverage, be honest about when and why the lapse in coverage occurred. If your previous history included paying your premiums on time, let the new company know that. A one-time incident is easier for the insurance company to understand than a long-standing pattern of missed payments.

Compare Quotes from Multiple Auto Insurers


The Internet makes it easy to shop around for the right coverage if you are ever caught in a situation where your car insurance has lapsed and your car is totaled.

You don’t need to wait until the worst happens before considering whether to switch companies, though. Why don’t you get quotes right now by clicking on the free insurance tool on this page? Get started comparing free car insurance quotes online now!

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