What Happens When Your Auto Insurance Lapses And How Can You Avoid This Problem?

Auto insurance is necessary for all drivers and car owners, yet it is also an expense that you might not like. If you run short on cash or have extra bills, you might forget to pay your auto insurance premiums. If this occurs, your insurance company might cancel your policy, leaving you without coverage. When this happens, you experience a lapse in coverage. Here is an explanation of what happens when your auto insurance lapses and ways to avoid this issue.

What a Lapse in Coverage Means

When you fail to pay your insurance bills, you will experience a lapse in coverage. When this occurs, it means that you have no insurance coverage. Your insurance policy ends the day the insurance company cuts it off, and you take on additional risks.

The Consequences of a Lapse in Coverage

Having a lapse in coverage might not seem like a big deal, but it is. You will experience consequences from a lapse, and the first one is you have no coverage. Suppose you drive your car when you have no coverage and end up wrecking it. What would you do if this happened? You would not receive any compensation for your car's damage, and the other person could sue you for damages. Driving without coverage is not a wise move.

The second consequence is the cost of a lapse. Anytime you lose your coverage and try to start a new policy, you might pay higher premiums. Insurance companies do not view lapses favorably. Instead, they view them as risks, and they charge higher rates to people after lapses occur.

The Best Ways to Avoid Lapses

If you already experienced a lapse, there is nothing you can do about it. However, you can avoid lapses in the future by taking the right steps. One option is to pay your annual insurance bill upfront. If you do this, you will only need to pay your bill once a year. Another option is to set up automatic monthly payments with your insurance agency. By doing this, the agency will electronically take the payments from your bank account each month. With this option, you will never miss a payment again.

If you own a car or drive one, you need auto insurance coverage. If you would like a quote for coverage, contact a local auto insurance agent to learn more about requesting a free insurance quote.

To learn more, contact a resource like The Policy Center.