Reinstating Auto Insurance: A Quick Guide To Getting Back On Track

Reinstating your auto insurance is a relatively simple process, but it can be complicated if your policy was cancelled due to non-payment. If your policy lapsed because you missed a payment, your insurance company will notify you by mail, phone, or email and offer a grace period to make your payments. If you do not make the payments within the grace period, your policy will be cancelled and your insurance company may decide not to reinstate it. If they do agree to reinstate it, they may raise your rates.

Contact your insurance provider

Contacting your insurance provider is the first step to reinstating your auto insurance. This can be done over the phone, through their website, or via a mobile app. It is important to call the correct phone number, as insurance companies often have different lines for different purposes.

Before you make the call, it is a good idea to have some key pieces of information to hand. This includes your policy duration period, your notice of policy cancellation, the missed payment bills, and the names of any other drivers in your household.

When you speak to your insurance representative, explain your situation and ask about the possibility of reinstating your policy. They may be able to work out a deal with you to make this process easier. For example, they might offer you a grace period to get your payments back on track. If you can pay the premiums you owe within this grace period, your policy may be reinstated without a lapse in coverage.

However, if your coverage has already lapsed, the process becomes more complicated. Many insurance companies will not reinstate a policy if a certain amount of time has passed (often 30 days) and you will have to apply for a new policy. In this case, your insurance history will show a lapse in coverage, which can lead to higher insurance rates in the future.

Even if your insurer does agree to reinstate your policy after a lapse, you will likely have to pay the premiums you owe upfront, plus any fines or reinstatement fees, before they reactivate your policy. Your policy period will also change to the new reinstatement start date, and this will show on your insurance record.

Understand the two types of policy reinstatement

Understanding the two types of policy reinstatement is crucial if you want to reinstate your auto insurance. The two types are:

Reinstatement with no lapse in coverage

If you can get your auto insurance policy reinstated without any lapse in coverage, you can avoid the consequences of letting your insurance lapse. These consequences can include suspension of your driver's license and registration, repossession of a leased vehicle, and a lower credit rating. By reinstating without a lapse, you can maintain compliance with your state's financial responsibility requirements, insurance costs, and the lienholder's insurance policy.

Reinstatement with a lapse in coverage

This type of reinstatement will result in you getting your coverage back on an effective date after the date it was cancelled. A gap will show up on your insurance history. This option may be more challenging, as you will need to switch to a new insurance provider and policy. You may also need to sign a "statement of no loss", declaring that you will not make any claims for the period when your policy was lapsed.

Know the consequences of not having car insurance

Driving without insurance is illegal in most states, and the consequences can be severe. Here are some reasons why you should avoid driving without insurance:

Financial Penalties

If you are caught driving without insurance, you will likely face financial penalties, including fines, fees, and increased insurance rates. The cost of these penalties can vary depending on the state and the number of offenses. For example, in Idaho, the fine for a first offense is $75, while in Delaware, the penalty for a first offense is a hefty $1,500 to $2,000 fine. Reinstating a lapsed policy can also be more expensive, as insurance companies may raise your rates.

License Suspension

Driving without insurance can result in the suspension of your driver's license. The length of the suspension can vary by state and the number of offenses. In some cases, you may need to file an SR-22, a special form proving financial responsibility, to get your license reinstated. This can also lead to higher insurance rates and fewer insurer options.

Vehicle Impoundment and Loss of Registration

If caught driving without insurance, your vehicle may be impounded, and you may lose your vehicle registration. This means you will have to pay additional fees to get your vehicle back and re-register it.

Legal Consequences

In some states, driving without insurance can result in jail time, especially for repeat offenses or if you are involved in an accident. This can range from a few days to a year or more in prison.

Lack of Financial Protection

Without insurance, you are personally liable for any damage or injuries caused in an accident. This can result in costly repairs, medical bills, and even lawsuits. If you are found at fault, you may be sued for thousands or even millions of dollars, potentially leading to debt or bankruptcy.

Difficulty in Obtaining Future Insurance

A lapse in insurance coverage can make it more challenging and expensive to obtain insurance in the future. Insurance companies may consider you a high-risk driver and increase your rates. A history of insurance lapses can also impact your ability to find coverage.

How to prevent policy cancellation

To prevent your auto insurance policy from being cancelled, there are a few key steps you should take. Firstly, it is important to understand the reasons why policies are typically cancelled. Policy cancellation often occurs due to non-payment of premiums, providing false information on your application, or having your driver's license suspended or revoked. To avoid cancellation, ensure you stay on top of your premium payments, be honest on your application, and maintain a valid driver's license.

In addition, there are a few other measures you can take to prevent policy cancellation:

• Stay informed about your insurance company's cancellation policies: Review your policy documents to understand the specific cancellation procedures, fees, refund policies, and notice requirements. Knowing these details will help you avoid unintentional cancellation.
• Maintain open communication with your insurance provider: If you are facing financial difficulties or other issues that may impact your ability to make payments, reach out to your insurance company. They may be able to offer alternative payment options or suggest ways to reduce your premium.
• Keep your contact and payment information up to date: Ensure that your insurance company has your correct contact information, including your address, phone number, and email. Also, if you have automatic payments set up, make sure your payment information is current to avoid missed payments that could lead to cancellation.
• Be proactive about policy renewals: Most policies have an automatic renewal option, but it's a good idea to confirm the renewal yourself. Contact your insurance provider before the end of your policy term to ensure a smooth transition to the new term and avoid any gaps in coverage.
• Review your policy regularly: Periodically review your policy to ensure it remains up-to-date and accurate. Inform your insurance company of any changes in your circumstances, such as moving to a different state, selling your car, or adding a new driver to your policy. This will help ensure your coverage remains valid and meets your needs.

By following these steps, you can help prevent your auto insurance policy from being cancelled and maintain continuous coverage.

What to do if your policy cannot be reinstated

If your auto insurance policy cannot be reinstated, you will need to initiate a new policy. This can be done either with your current insurer, if they allow it, or with a new insurer. If your policy was cancelled due to non-payment, you will need to start shopping for new auto insurance coverage.

If you are unable to get standard coverage with traditional insurers, you may be forced into the non-standard auto market. This means you will need to purchase a policy from a private insurer that specialises in high-risk drivers. These policies are for drivers with bad accident records, high-performance cars, or those who live in high-risk areas. If you are denied coverage through the private market, you may need to join a state-assigned risk pool. Auto insurers participate voluntarily in state-assigned risk goals, and each participating insurer must accept assigned motorists. While you will be provided with auto insurance coverage, it will likely be much more expensive than a traditional insurer.

If your policy was cancelled due to a suspended or revoked driver's license, you will need to resolve this issue before you can get a new policy.

Frequently asked questions