Does A Lapse In Car Insurance Affect Rates?

Sherri Ramos

If you stopped driving for a while and let your car insurance policy lapse, you should know that this lapse in coverage may affect the rates you pay for your insurance. Insurance companies often view lapses as risks, and they will compensate for this by charging a higher rate. If you recently had a lapse in your coverage, here are a couple things you should know.

Why this is viewed as a risk

Insurance companies are great at collecting and analyzing statistics relating to car accidents, driving, premiums, and demographics. One of the things they have found is that people who allow their insurance policies to lapse are more likely to get into accidents. Because of this, insurance companies will charge higher rates for policyholders who have experienced lapses in coverage.

It's important to realize that insurance companies can usually find out if a person has had a lapse in coverage, so this is not something you should lie about. In fact, it's usually easy for an insurance company to know this because they ask. If you call for a quote, the company will ask you what company you are currently using, and they may even check to verify that this information is true.

The price you may pay

Any lapse in coverage can result in paying more for your insurance. However, shorter lapses in coverage will typically result in lower premiums. In other words, if you realize your policy has lapsed, you should call immediately to get coverage. The longer you wait, the higher your premiums will be in most cases.

For example, if you allow your policy to lapse for less than 30 days, you may only have to pay a few dollars more for coverage. If you allow the lapse to last for more than 30 days, you may end up paying double for your car insurance coverage.

What you can do if you do not need coverage

If there is a time in your life when you really do not need auto insurance coverage, you should still talk to an insurance company about getting a policy that is known as a non-owner's auto insurance policy. This may cost around $200 to $300 per year, but it would cover you if you borrowed a car to drive, and it would protect you from spikes in rates due to lapses in coverage.

If you have any questions about a recent lapse in your auto insurance coverage, contact an insurance agency like Allstar Insurance today.