Don’t let your auto insurance lapse!
Life does not always go as planned – you lose your job, your car needs repairs or you might just have other bills that you feel are more important. Whatever the case may be, you find yourself unable to pay your car insurance bill. Before you let your policy lapse, or cancel, you may want to consider a few things.
What Happens When You Don’t Pay?
Auto insurance companies are not flexible in the slightest when it comes to helping people out through financial hardships. Unlike other types of insurance (e.g. life insurance), there is generally no grace period with auto insurance, so if you don’t make your payment, your insurance will likely be cancelled that day. If that happens, you will no longer have coverage and be considered in a lapse.
Penalties for not having insurance can be quite severe. Fines from the police and license suspension are two of the most common penalties if you’re caught driving without insurance. One way to avoid these penalties is to turn in your plates and registration to the DMV/RMV, which may seem like a last resort option.
If you ever find yourself in this situation, you must understand how important it is to keep your vehicle off the road. Not only is it illegal to drive without insurance, but you can’t even leave your vehicle parked on the street without coverage. If you don’t have a garage or a spot in your driveway, you’ll have to find somewhere else to store it while you wait to reinstate your policy.
Getting Coverage Back
If you “turn your insurance back on”, you’ll quickly realize that your rates may have increased. Among all the other rating factors insurance companies use to determine rates, one of them is if you have a record of not paying your bills. Drivers who let their insurance lapse can pay up to 8% more for their insurance because insurers consider non-payers and delinquents to be in a higher risk category.
How to Prevent it From Happening
- Most insureds have their payment set up automatically through a bank account, which is the best way to make your payments. That way, your policy will never cancel because you “forgot” to make the payment.
- If the issue is being able to afford it, you may want to consider changing your coverage. Lowering your coverage to state minimum limits or raising your deductibles will lower your price while keeping the policy in force.
- Driving a different car might help if you have another one that might be less expensive to insure. Small, compact sedans will be cheaper than expensive luxury coupes, performance cars and trucks. Taking one vehicle off your policy while leaving the other one on will maintain the policy at a much lower rate.
- Shopping around for different companies would be a great way to try to save money without changing anything in your policy. There may be another insurer out there that will insure you and your vehicle at a lower rate based on their rating factors, so it’s always worth looking into.
Keep in mind that letting your insurance lapse can end up being a lot worse than you think, so to save yourself a lot of time, money and headache in the long run, don’t let your insurance lapse! Thank you for reading, and if you’d like help shopping around different companies, give us a call today!