A study by the Insurance Research Council found that in 2019, 12.6% of all drivers in the United States—that’s around one out of every eight drivers—were uninsured. While not all uninsured drivers find themselves in that predicament because of lapsed coverage, it’s safe to say that insurance lapse was a contributing factor in many, if not most, cases.
If you let your car insurance lapse, chances are it wasn’t because you wanted to be uninsured. For some drivers, a coverage lapse is just an accident: They forget to pay the premium. For others, it’s a matter of financial necessity. If it comes down to a choice between feeding the family or paying insurance premiums, the premiums are likely to go unpaid.
What Is a Car Insurance Lapse?
With the exception of New Hampshire, every state and the District of Columbia have minimum auto insurance requirements. As a rule, if you’re the registered owner of a driveable car, you (or another registered owner) must maintain the state-minimum insurance coverage on that car.
An insurance lapse happens when your car insurance terminates or isn’t renewed, leaving your car uninsured. Insurance coverage can lapse for lots of reasons. Here are some of the most common:
- you don’t pay the insurance premium
- you cancel the policy and don’t replace it with another, or
- your insurance company cancels or refuses to renew your coverage and you don’t get replacement coverage.
What Happens When Car Insurance Lapses?
What might happen if your car insurance lapses? The answer will depend on your circumstances and state law, but here are some possibilities.
Your Insurance Company Reports You to the State
In some states, your insurance company must notify the state department of motor vehicles of a lapse in required insurance coverage. On receipt of this notice, the state typically will suspend your auto registration, your driver’s license, or both.
Here’s an example. In Florida, on being notified of a lapse in coverage, the department of motor vehicles “shall suspend … the registration and driver license of any owner or registrant of a motor vehicle with respect to which [insurance] is required… .” (Fla. Stat. § 324.0221(2) (2023)). The license and registration can be reinstated on payment of a fee and proof of insurance coverage.
Lender Can Buy Insurance or Repossess Your Car
If your car is financed (with a loan or a lease), your financing contract almost certainly requires that you keep the car insured. If you don’t, the lender probably has a couple of options. First, the lender can buy something called a “forced-placed insurance” policy—the coverage will be very expensive—and add the premium cost to your monthly payment.
Second, the lender might repossess your car. The lender will prefer the forced-placed insurance option because repossessing and selling your auto is expensive. Of course, if you can’t pay the premium your insurer charges then you probably can’t pay the forced-placed premium either. So the lender may end up with no choice but repossession.
Lapsed Coverage Can Affect Your Car Insurance Rates
Once your insurance has lapsed, getting coverage reinstated can be costly. Some insurers will refuse to cover you. Depending on your circumstances, your only option might be with high-risk, high-cost insurance companies. If you’re able to find coverage, expect to pay a higher rate.
How much more? That will depend on several factors, including the insurance company, the state where you live, your age and driving history, and how long you were without coverage.
Is There a Car Insurance Lapse Grace Period?
A grace period is the length of time after your premium is due that you can pay the premium without any lapse in insurance coverage. Most insurance companies provide a short (between 5 and 20 days is common) grace period. Whether you’ve got a grace period depends on your insurance company and the state where you live.
If you miss a premium payment, the company usually sends an email or a letter telling you that the premium is late. The notice will also tell you the date on which the policy will be canceled if you don’t pay. To avoid a lapse in coverage, you must pay the past-due premium, and usually a late fee, before the cancellation date.
What Should You Do If Your Car Insurance Lapses?
First and most important: Don’t drive. If you do, you could face serious financial and other consequences.
Here’s what to do if your car insurance lapses:
- contact your insurance agent to see if your policy can be reinstated, and
- if your insurance company won’t reinstate your policy, shop around for coverage.
Contact Your Insurance Agent
The first call you make should be to your insurance agent, to ask about getting your policy reinstated. Whether your coverage can be reinstated will depend on several factors, like:
- your insurance history, including previous lapses or cancellations
- your driving history, including accidents, criminal violations, and traffic citations
- the reason for your current insurance lapse, and
- how long your current lapse has continued.
Some insurance companies won’t reinstate your car insurance after a lapse. Others will reinstate your policy (or issue you a new policy) but will charge reinstatement fees, increased premiums, or both.
Depending on the insurance company, a lapse of up to 30 days might cause little or no premium increase. But a lapse of more than 30 days is likely to bring a steep rate hike. Compared to what you’d pay with no coverage lapse, after 30 days you could see a premium increase of 30% or more.
Shop Around for Coverage
If your insurance company isn’t willing to reinstate your policy after a lapse, do some shopping for coverage. But be prepared. To an insurance company, a lapsed driver is a risky driver. You’ll have to pay more—and probably for less coverage—than you were paying before your policy lapsed.
Consequences of Driving Without Car Insurance
Lots of things can happen if you drive without car insurance, and none of them are good. The consequences you might face will depend on your state law. Here are some of the possibilities.
Tickets, Fines, and More
If you get pulled over for a traffic violation or you’re in an accident and the police find out you’re driving without insurance (they probably will, and don’t lie to a police officer about it), you might find yourself:
- with a ticket for driving without insurance
- if your license or registration were suspended after your insurance lapsed, with tickets (or worse yet, under arrest) for driving without a license, without a valid registration, or both, and
- without a car, because it might be towed and impounded.
You’ll be facing costly fines and fees, as well as possible jail time if you’re charged with criminal offenses. If your license and vehicle registration weren’t suspended before you got pulled over, odds are they will be after you’re caught. In the unlikely event that you get to keep your license, you’ll probably end up with points against it for driving while uninsured, adding to your insurance woes.
Long story short: if money problems are what led you to let your car insurance lapse, getting caught driving without insurance is only going to make things worse.
What Happens If Your Insurance Lapses and You Get Into an Accident?
The likely consequences of an auto accident when your insurance has lapsed will depend, in part, on whether you were at fault for the wreck.
If You Were Not at Fault for the Accident
If the accident was a minor fender bender, nobody was hurt, and the police don’t respond, you might get away without any consequences—as long as the other driver has insurance that will cover the cost to repair your car.
If the Police Respond
If the police do respond and find out you were driving without insurance, you could be facing problems like those described above under “Tickets, Fines, and More.” Even though the wreck wasn’t your fault, you were driving without insurance (and maybe on a suspended license or registration) in violation of the law.
Your Injuries and Property Damage
The at-fault driver’s liability insurance (if they’re insured) should cover your medical expenses and property damage, at least to the extent of available coverage. But it’s likely to take some time for the insurance company to pay.
In the meantime, because you’re without auto insurance, you might not have the funds to pay your medical bills and car repair costs. If you have health insurance, that should cover your medical bills. Unfortunately, you’ll likely end up being out of pocket for your car repairs.
Bringing a Claim Against the At-Fault Driver
If you were hurt or your property was damaged, can you bring a claim for compensation (“damages”) against the other driver’s auto insurance? In most states, yes. But several states have enacted what are sometimes called “no-pay, no-play” laws. These laws can limit your ability to bring a claim for injuries or damages after an accident even if the other driver was to blame.
A handful of no-pay, no-play states bar any recovery at all. Others limit your ability to collect certain kinds of damages, like for pain and suffering. If you live in a no-pay, no-play state and want to bring a claim after an accident, think about talking to an experienced car accident lawyer to learn about your options.
If You Were at Fault for the Accident
If the accident was your fault, then in addition to the possible consequences we’ve already described, you might be on the legal hook if others were hurt or suffered property damage. With no liability insurance to cover their losses, other drivers, passengers, and anyone else who suffered damages might sue you personally.
Depending on the facts of the case and the injuries involved, you could be facing large financial liabilities. Should you find yourself in this situation, you’ll want to consult with experienced legal counsel to explore your options, which might include filing for bankruptcy.
Next Steps
Most car insurance lapses happen by accident or because of financial hardship. The good news is that if you’re able to pay the past-due premium fairly quickly—within the grace period or a few days after lapse—the consequences can be manageable.
But if the lapse continues for an extended period, you’re caught driving, or you have an accident while uninsured, you can be facing serious problems. If you find yourself in any of those circumstances, you’ll want to find out about your legal options.
An experienced car accident lawyer can guide you through the claim process should you decide to pursue an injury claim. If you need help with other legal problems but can’t afford an attorney, look into getting free or low-cost legal help.