What happens if I have a gap in car insurance?

Southport CT women braces neck outside of car accident. She is about to find out that there was a lapse in her insurance coverage and she will be paying out of pocket for the damages.We received a call last week from a prospective client and they are insured with a direct insurance carrier and they were explaining that they had a gap in car insurance coverage due to non-payment/late payment over the summer. This became an issue when the insurance carrier didn’t give them notice of cancellation and just returned their premium payment.

Why is this bad? The prospective client was in a car accident during that gap in coverage. Assuming the insurance was still active when the accident occurred, they gave that policy number to the attending officer. It was only when calling to advise the insurance company of the accident that they found out the policy was no longer active. Consequently, all damage to the vehicle will have to be paid out of pocket.

Did you know if you are insured with Daigle & Travers, one of our representatives will notify you if you have a payment past due? We reach out to our clients if there is a chance of cancellation. This is a big difference between working with an insurance agent and an internet insurance provider.

What is a lapse in auto insurance coverage?

A lapse in car insurance is any period in which you have a registered car, but don’t have car insurance. There may be several reasons:

  • The policy ran out.
  • Your policy was canceled because you missed a payment.
  • Your policy wasn’t renewed due to insurance claims.

Costs of a Gap in Coverage

One of the obvious issues that can arise is having to pay out of pocket if you are in an accident during a gap/lapse in coverage. Did you also know that when you go to purchase new insurance, your rates will be increased? Clients that have a gap in auto insurance experience on average a 9% increase in insurance premiums.

Depending on how long you have been without coverage, you may even be deemed high-risk. A higher-risk label means even higher premiums than a simple rate increase would entail.

  • Insurance companies see any lapse in your coverage as a sign of a lack of responsibility.
  • To an insurance carrier, this means, the chances are higher that they will need to pay out a claim. Therefore, they increase your rates.

The good news is, once you have maintained insurance coverage for 6 months, you are eligible for better insurance rates, assuming you haven’t had any accidents or driving violations.

The moral of this story is, make sure that you work directly with a local insurance agent that has your best interests in mind. Don’t put yourself in a position of having to pay out of pocket for a claim that an insurance carrier could’ve covered.