Car Insurance Coverage Lapse

If your car insurance company lapses, there are serious consequences. In some states there are no immediate consequences, but in many states, even a one day lapse in car insurance is against the law; there is no car insurance lapse grace period at all. Not only is a single day lapse a crime in some states, getting car insurance for a lapsed policy will be much more expensive. If your auto insurance policy lapses, insurance companies are allowed to charge higher rates when you reestablish your auto insurance policy. There are some common occurences that can cause your car insurance policy to lapse that you may not even be aware of. Read on to learn how to avoid these pitfalls and what you can do to find a cheap car insurance policy after a lapse.

Free Auto Insurance Comparison

secured lock Secured with SHA-256 Encryption

Chris Tepedino is a feature writer that has written extensively about auto insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and ...

Full Bio →

Written by

Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

Full Bio →

Reviewed by Rachael Brennan
Licensed Insurance Agent Rachael Brennan

UPDATED: Jul 19, 2021

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Sometimes, car insurance coverage lapses happen. Sometimes it happens when you get deployed overseas. Other times, it’s because you get behind on your monthly payments.

You may have even been recently convicted for a violation that your insurance company deems worthy of coverage cancellation, or are returning to the road after several months or years without owning a vehicle.

Regardless of your situation, picking up where you left off and starting a new auto insurance policy can become an expensive headache very quickly. Trying to compare auto insurance companies and get a new policy started can be overwhelming.

We’re here to help.

Below, we’ll get into how you should navigate these treacherous waters in order to get back on the road and driving legally with an insurance policy you can actually afford.

Use our FREE quote tool to compare insurance rates now!

Lapse of Coverage Penalties

If your car is still registered with your local DMV, but your insurance coverage gets canceled for whatever reason, you won’t just be in trouble with your insurance company — you’ll be in trouble with your state government, too (the only exception to this is if you sell or transfer ownership of your vehicle before canceling your coverage).

Even if you don’t get cited for driving without insurance while you’re on the road, there are many states where insurance companies are legally required to inform your local DMV that you no longer have coverage and that you may be driving illegally.

Many states will revoke your license, charge you heavy fines, and may even require you to file an SR-22 in order to be able to drive legally once again.

You’ll have to check with your state laws to make sure you know what you’ll have to pay to achieve legal status once again, but some common types of fines include:

  • A license reinstallment penalty costing anywhere from $14 (CA) up to $500 (MA). This fee is in some states and is likely to increase with multiple offenses.
  • Instead of a flat fee, some states charge a small financial penalty for each day that you go without insurance. Depending on your state, this daily compounding fee may also be combined with a flat penalty starting on day one of your lapsed coverage. South Carolina drivers are lucky, though; their daily compounding fee is capped at a total of $200. Most other states will continue charging you until your coverage is reinstated and the fees are paid.
  • In still other states, the laws are much more relaxed. North Dakota, New Hampshire, and Iowa have no financial penalties at all for a lapse in coverage. In Montana, they will be forgiving of your first lapse in insurance; but subsequent lapses will be subject to fines and legal penalties. In Missouri, nobody will know that your coverage has lapsed until you get pulled over by the police. But if you do get pulled over, you’ll have to face some very serious consequences.

Free Auto Insurance Comparison

Enter your ZIP code below to compare auto insurance rates.

secured lock Secured with SHA-256 Encryption

Enter your ZIP code below to compare auto insurance rates.

secured lock Secured with SHA-256 Encryption

Common Causes for a Lapse in Car Insurance Coverage

There are many different you may end up suffering a lapse in your car insurance coverage. But the two main causes are either financial or circumstantial:

  • Missed payments or failure to renew. This is one of the most common forms of coverage lapse. This is also the most common scenario in which your local DMV will be immediately notified that you are no longer carrying insurance coverage as required by law. And as soon as that happens, you can expect to deal with any of the financial penalties listed above.
  • Moving and/or traveling. Active duty military servicemen and women, along with college students (whether traveling within the country or abroad for studies) are the most vulnerable to being penalized with a lapse in coverage due to the fact that they may not be driving the car they own for many months at a time or longer. If you fall into either of these categories, you should know that most car insurance companies are willing to work with you to keep your insurance current while you aren’t using your vehicle. Many even offer significant premium discounts while you are away, or will even suspend your coverage for free under special circumstances.
  • Selling your car. If you sell your car for whatever reason and cancel your insurance coverage in turn, you’re going to find a tough time finding an affordable insurance policy if and when you decide to start driving again. It may not make any financial sense whatsoever to maintain a car insurance policy if you don’t own a car; but even if you had a perfect driving history in the past, the lapse in coverage still gives your prospective insurance company the right to charge you a higher premium — or to refuse to issue you a policy altogether. However, many insurers will start offering you a reasonable rate on your monthly premiums after you have maintained your new coverage for anywhere from 6 months to a year.

Auto Insurance Rates by Length of CoverageLegend: Newly Insured 6 Months of Coverage 1 Year of Coverage or More NationwideAllstateFarmersState Auto 153045607590105120135150$164$148$126$155$140$94$108$104$87$108$97$87

How a Lapse of Insurance Coverage Increases Your Premiums

No matter what, there’s a very high likelihood that once you get your policy reinstated after a lapse in coverage — even if that coverage was for as little as a single day — you’re going to be paying higher premiums no matter what.

Many companies are willing to offer only a small rate increase, sometimes as little as 8 percent or less, as long as the lapse was short and you were very proactive in getting your coverage reinstated.

But if for whatever reason, it took you longer than 30 days to renew your policy or to purchase a new one, you can expect some substantial increases, as you can see in the chart below:

Auto Insurance Rates by Length of Coverage LapseLegend: Short Coverage Lapse Extended Coverage Lapse State FarmState AutoFarmersNationwide 20406080100120140160180200220$72$156$104$206$99$187$121$233

What to Do If You Have a Current Lapse in Coverage

One of the worst things you can do when your insurance coverage lapses is to drive illegally. But this can be hard for many, especially if your lapse in coverage is caused by the fact that you were struggling to pay your premiums in the first place.

The consequences for driving illegally without insurance can be very expensive, and may even result in jail time depending on your state’s laws.

The best thing you can do is to shop around for a bare minimum policy once you have a chance to purchase coverage once again. In the chart below, you can see examples of how expensive insurance premiums are for a liability-only policy (the bare minimum amount of coverage you must purchase in order to drive).

It may not give you complete peace of mind as far as what financial troubles you may face in the event of an accident or the need to file a claim. But it will at least keep you driving legally and give you the opportunity to save up for more coverage in the future.

Liability Only Car Insurance RatesLegend: Liability Only Policy ArkansasFloridaCaliforniaNew YorkTexasWashingtonVirginia 102030405060708090100$70$90$84$87$101$54$63

It’s going to be tough to recover from a lapse of insurance coverage, especially if your lapse is a long one. But there are things you can do to try and get a more affordable rate whenever you finally get to purchase a new car insurance policy.

You’re going to have to compare quotes between many more car insurance companies than the average driver, due to the fact that most providers will either charge you exorbitant rates or refuse you outright because of your lapse.

But if you take a minute to use our fast, free quote generator, it’ll only take you a fraction of the time to find a reasonable rate.

Just enter your FREE zip code today!

Free Auto Insurance Comparison

Enter your ZIP code below to compare auto insurance rates.

secured lock Secured with SHA-256 Encryption