You may have encountered the phrase “Lapse in Insurance Coverage” while changing insurers or when you miss payments on your continuous car insurance coverage. While maintaining continuous car insurance coverage can help keep your insurance premiums low, you may end up in a case where your car insurance will lapse.
Resolving insurance lapses quickly offers dual benefits: financial protection and peace of mind, safeguarding you against unforeseen incidents like accidents. Most times, a lapse in insurance Policy may not be intentional, while other times it may be due to failed payments or a defaulted insurance policy. Other cases where you may face lapses in insurance coverage are when you switch from one insurer to another or cancel your old insurance coverage before the new one begins.
However, a lapse in insurance coverage may last as short as a day, while sometimes it lasts longer depending on your situation. Irrespective of any case you fall into, it is better to avoid lapses in your insurance coverage than to have a hard time fixing it.
How Does a Loss in Insurance Coverage Affect Insurance Rates?
Having a lapse in insurance coverage may cause car insurance companies to consider you a high-risk driver, and you may have to pay more on premiums. In the event of a lapse in car insurance coverage, policyholders may face an average yearly payment of $602 for basic coverage, which is higher than the national average. However, costs can differ between insurance companies.
What Should I Do if I Have a Lapse in Insurance Coverage?
In cases where you have a lapse in insurance, it is a good idea to fix this problem as soon as possible to prevent it from increasing. Some car insurance companies offer grace periods to help policyholders with lapses in their coverage fix the issue before it escalates. If you have a lapse in your insurance policy, follow the below steps to sort it out:
- Contact an insurance agent.
- Take advantage of the grace period given.
- Purchase a new policy.
- Stay off-road while the issue is being sorted out.
Through these steps, you can easily fix the lapse in your insurance policy. However, if you intend to change insurers, avoid canceling your existing coverage while the new one is yet to kick in.
Does a Lapse in Insurance Coverage Credit Score?
No, lapse does not generally affect your credit score. In cases where a policyholder is in debt with the car insurance company for coverage, a lapse in coverage may likely affect your credit score.
How do I Avoid a Lapse in My Insurance Policy?
One of the best ways to avoid a lapse in your insurance coverage is to make your insurance premium payments on time. In cases where you are having a hard time paying your insurance premiums, contact your insurance company to regulate a new payment plan to make payments easier. Another way to avoid a lapse in coverage is by avoiding cancellation of your existing coverage when you are changing insurance companies. However, other ways to avoid a lapse in your insurance coverage are:
- Apply for electronic documents.
- Check out ways to reduce your insurance premiums.
- Place your coverage on hold or begin a new non-owner insurance policy.
Through these processes, you should be able to avoid lapses in your insurance coverage.
How to Get Car Insurance After a Lapse in Insurance Coverage?
If your insurance company will not offer a new payment method or a grace period, opting for a new insurance company may be a good idea. While it may be difficult to get a new insurance policy, using the following steps, you can easily purchase and be approved for new car insurance coverage.
- Consider what type of insurance you can get.
- Evaluate how much insurance coverage you need.
- Get quotes and rates from different insurance companies.
- Compare insurance rates, coverage costs, premiums, and limits of different insurance companies.
- Purchase your car insurance policy.
While carrying out this process, ensure you do it as fast as you can to prevent the lapse from escalating. One of the best ways to prevent this is by ensuring your new policy kicks in before cancellation.