What Happens if You Let Your Auto Insurance Lapse?

Natalie Josef
August 22, 2012

There are some people who like to push things to the limit—I am not one of those people. I pay my bills as soon as I get them. I do my taxes the first week of February. I do my Christmas shopping in November. Even as a kid, I usually finished my homework before I even left school. I hate to feel anxious, and putting things off to the last second is just too uncomfortable for me.

That said, sometimes mistakes happen. Life gets too busy. Something gets lost in the mail. Maybe you lose your job and barely have enough money to cover rent. You never know when the universe is going to throw you a curveball. So, even if you are a hyper-prepared worrywart like me, you might find yourself facing a situation you never thought you would—a lapse in your auto insurance.

We’ve all been warned never to let our auto insurance lapse, but what happens if it does?

Auto insurance is required by law in 48 states. If you get caught without it, any number of penalties may be thrown your way—high fees, fines, suspension of your driver’s license and/or vehicle registration, seizure of your vehicle, and even misdemeanor charges. If you are pulled over while driving without insurance, your vehicle may be towed, and you will be charged for that, too. You can even be arrested on the spot. Being late on one payment is all it takes for your coverage to be canceled.

The fact that you were caught without auto insurance can even hurt you when you try to apply for a policy in the future. You could be considered “high risk” by insurance companies, who may then charge you hundreds of dollars more each year or reject you outright, even if the company had insured you before. A lapse in auto insurance can also negatively impact your credit.

More importantly though, if you have an accident while uninsured and you are found to be at fault, the money you will spend on lawyers, medical care for possible injuries, and repairs to both vehicles could be enough to effectively ruin your financial future.

If you do experience a lapse in coverage, you do have a few options. If you have difficulty finding new insurance, go hunting online for cheaper policies you can afford. Be sure to disclose the fact that you have had a lapse though; if you don’t and they find out, they can cancel your policy for non-disclosure. You can also check out your State Automobile Insurance Plan, which is a safety net for those folks whose insurability has been severely affected by a lapse in coverage. It will be expensive and the coverage will be limited, but if you have no other choice, it's your best bet.

So, whatever life throws at you, try not to let your auto insurance lapse. Though you might save a few bucks now, you will end up paying for it dearly in the long run.


Natalie Josef

About the Author

Natalie Josef is an automotive expert at RepairPal, the leading online source of auto repair resources and estimates. With many ASE Master certified mechanics on staff who have decades of experience, RepairPal knows all the fine points of car repair.

No comments yet...

Sign in to comment