Car insurance lapses after the grace period for the policy ends with no payment being made. Most insurance companies have a grace period for late payments, usually around 10 days, but not all insurers or state laws allow them. New York, for example, does not permit grace periods on any type of insurance.
What Happens if Your Car Insurance Lapses?
If you are still within the grace period, you can make a payment and avoid a lapse in coverage. If you’re already outside the grace period, you are uninsured and do not have coverage.
The insurance company will send a formal notice that your policy has been canceled, but you may still be able to get it reinstated. It’s still unlikely your insurance company will be willing to pay for a claim that happened during the time you were technically uninsured, though. Even if you only miss the deadline by a day or two and are able to get your policy reinstated, claims for the gap between policies will probably be denied.
Let’s say your grace period ended on a Monday and you rear-end someone on Wednesday. Your insurance company may let you reinstate your policy for coverage moving forward, but it’s extremely unlikely they will cover the Wednesday accident. Lying to say the accident happened on Friday after your coverage was reinstated would be insurance fraud and very suspicious to your insurer.
Consequences of a Lapse in Coverage
Allowing your car insurance to lapse is considered driving without insurance, and you can face all the legal and financial consequences of driving uninsured. You could face hefty fines or have your license and registration suspended, and the next time you go to buy insurance, you’re going to be considered high-risk.
A lapse in coverage can dramatically raise rates, even if you don’t get into an accident or are convicted of driving uninsured. And if the worst-case scenario does happen, you can be held personally liable for all damages in an accident.
How Auto Insurance Reinstatement Works
If your car insurance lapsed because you missed the grace period, you may be able to get your policy reinstated. When reinstating, you should be able to pay the past due balance and keep the same policy number, coverage, and insurer that you had before. You may have to pay in full for six months or the remainder of your policy period, and you’ll probably have some late fees or policy surcharges. In some cases, your insurance company may decide to reinstate your policy with new effective dates, reflecting the days you didn’t have insurance.
Your chances of reinstatement are pretty good if you’re in good standing with your insurer, but high-risk drivers may have a harder time. In fact, many insurance companies have different grace period rules for high-risk policies. If you’re already a high-risk driver, paying on time to avoid a lapse in coverage is even more important, since you’re more likely to be dropped or denied coverage.
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