What does a lapse in coverage mean?
A lapse in coverage typically occurs when an insurance policy is not renewed or paid for on time, which may result in a break in your insurance. This can happen for many types of insurance policies, including personal auto insurance and commercial auto insurance. A coverage lapse may occur after as little as one day or as much as one or two months, depending on your situation. If you experience a lapse in coverage, this usually means that you would be uncovered in the event of an accident.
What can cause a lapse in coverage?
Understanding the lapse in coverage meaning and why it occurs may be critical for drivers. One of the most common reasons for a lapse in coverage is failing to pay your insurance premium on time. Some insurance companies may offer a grace period, but that depends on your state or carrier. Typically, if your payments are not made within a specific time, your coverage may be canceled.
Another cause of a coverage lapse is the failure to renew your auto insurance policy before its expiration date. Auto insurance policies usually last six to twelve months, so it may be crucial to remember when your policy expires.
A more difficult situation that may lead to a lapse in coverage is when you switch providers. If you decide to change insurance companies but do not finalize the new coverage before your current policy ends, there may be a gap in your coverage.
Consequences of a lapse in coverage
In many states, driving without insurance is illegal. This means that a lapse in coverage, even by accident, could result in fines, license suspension, or legal penalties. Making your auto insurance payments on time may help you avoid additional expenses and legal troubles.
A lapse in coverage could lead to additional consequences like higher premiums. If your insurer sees that you’ve had coverage gaps, you may experience escalated rates when you reinstate your policy or purchase a new one. Insurers may view a lapse in coverage as a sign of higher risk, which is why your rates may go up.
During a lapse in coverage, you would be uninsured, which means that you may be solely responsible for paying for vehicle damages or medical costs in the event of an accident. Without coverage, the financial burden after an accident may be severe, which is why it may be beneficial to pay your auto insurance bill in a timely manner.
How to avoid a lapse in coverage
Completing your monthly insurance payments can be a significant method to avoid lapses in coverage. If you’re worried about missing your payments, you may be able to set up automatic payments with your insurance company. Setting up an automatic routine may prevent you from forgetting to make your payments each month.
Some insurance providers may also offer discounts for early payments or paying your premium in full. Paying your auto insurance bill up front could help you save money in the long run while avoiding lapses in coverage.
In the case of switching to a new insurance provider, it may be helpful to contact your current provider well in advance before changing. You may also want to make sure the start date of your new policy overlaps with the end date of your current policy. Communicating with your insurance providers may help you understand when each policy begins or ends, which may help you prevent a coverage lapse.
How Infinity Insurance Agency, Inc. (IIA) may help you
IIA is a trusted auto insurance agency that can assist you through your insurance journey. We can help answer your questions about coverage lapses as well as help you navigate your coverage options. If you’re looking to switch providers or update your current policy, call us today at 1-855-478-3705 or head to our website for a free personalized quote. Our Spanish-bilingual team can help you find coverage that matches your needs and budget.