What Happens If Your Car Insurance Lapses

What happens if your car insurance lapses depends on your state's laws about driving without insurance. Most insurance companies automatically renew policies, so you only need to take action if you want to change companies.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Sep 21, 2020

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Here's what you need to know...

If you experience a gap in car insurance coverage and you still own a registered vehicle, then you have one of two options. To remain in compliance, you can immediately purchase additional insurance.

Most car insurance companies will automatically renew your policy when your previous term expires.

Typically, they send you information letting you know that your policy is about to expire and what action you should take if you no longer wish to carry your car insurance.

If you don’t receive notice of cancellation and your policy lapses, then you need to contact your insurance company to find out why.

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Can my insurance company cancel my policy because of excessive insurance claims?

An insurance company can choose not to offer you car insurance. If you have a lot of claims on your policy, the insurance company may determine that it’s is not cost-effective to continue to offer you auto insurance.

The good news is that just because an insurance company chooses to drop you as a customer doesn’t mean that you can’t get insurance somewhere else.

Keep in mind that if you have an excessive amount of claims, your name is put into a database. Other insurance companies may insure you, but they will charge you higher rates to do it.

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What can I do if my car insurance is terminated due to DUI convictions?

If your policy is terminated because of a DUI/DWI conviction, you may have to look to a specialty company to help you with future insurance. There are many companies that offer car insurance to individuals who are considered to be extremely high risk, such as people who have been convicted of driving under the influence.

If you have multiple DUI convictions, there is every possibility that your driver’s license has been suspended.

If this is the case, and you don’t have other drivers on your vehicle, you may want to turn in your license plates until you can drive again. There is no point in paying excessively high insurance rates for a vehicle that you cannot even drive.

Even when you have your license back and time has elapsed between your DUI and your current driving record, you can expect to pay more for your car insurance. DUI convictions stay on your driving record longer than most other driving incidents.

According to the Insurance Information Institute, 32 percent of all crash fatalities occur because people who drive drunk. If you have multiple DUI convictions, even if you are now sober, you are going to be considered a high-risk driver for a very long time!

If an insurance company won’t sell car insurance coverage to me, is there another alternative?

How can I stop an insurance lapse? There are some situations that will simply make you a driver that is too high of a risk for a typical insurance company to insure. In many states, you have the option of buying a state auto insurance plan.

If you can’t afford car insurance, some states provide affordable options for you as well. For example, the California Department of Insurance offers the California Low-Cost Automobile Insurance Program.

If you purchase state-supported car insurance because of a bad driving record, this will have an impact on your rates Don’t expect to get a lower rate if you have multiple claims, DUIs, and so on, listed on your driving record.

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References:

  1. https://www.statefarm.com/insurance/auto/resources/high-risk-auto-insurance
  2. https://www.iii.org
  3. http://money.usnews.com/money/personal-finance/articles/2013/10/04/decoding-the-mysteries-of-high-risk-car-insurance
  4. https://www.insurance.ca.gov/

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