Insurance Lapse: What Happens Next?

Failing to renew your vehicle insurance can have serious consequences. If you don't renew your policy, you could face a lapse in coverage, which may result in higher rates once you're insured again. You may also be fined, have your license suspended, or be held financially responsible for property damage or injuries caused in a car accident. While it is possible to reinstate your policy after a lapse, you will likely be charged a penalty. If you're unable to renew, it's important to purchase a new policy to avoid these penalties.

You will need to get coverage from another insurer

If your car insurance company decides not to renew your policy, you will need to get coverage from another insurer. This is known as a policy non-renewal and it happens when your insurance company discontinues your policy at the end of the coverage period. Non-renewal can occur for a variety of reasons, including multiple accidents, too many insurance claims, or even through no fault of your own. For example, your insurer may decide to reduce its number of customers in your area.

To get coverage from another insurer, there are several steps you should take. Firstly, determine how much coverage you need. It is recommended that you buy enough liability car insurance to match your net worth, rather than just the minimum liability coverage required by your state.

Next, research different car insurance companies. Don't just focus on price; customer service and claims handling are also important factors to consider. Compare car insurance quotes from multiple companies for the same coverage amounts to find the best deal. Even if you have a less-than-perfect driving record, you may find that some companies charge much less than others.

Once you've found a suitable insurer, be sure to set the effective date for your new policy to the day your old policy expires. This will ensure that you avoid a lapse in coverage and won't be driving uninsured.

If you're having trouble finding a new insurer, you may be eligible to buy insurance through a state-run program. For example, in Illinois, you can buy insurance through the Illinois Auto Insurance Plan if you can't find coverage elsewhere.

Your rates won't necessarily increase

If your car insurance company decides not to renew your policy, it is known as a non-renewal. This is different from a cancellation, which is rarer and more serious, as it occurs during the term of the policy. Non-renewal happens when your insurance company discontinues your policy at the end of the coverage period.

Non-renewal may happen through no fault of your own. For example, your insurer may decide to reduce its number of customers in your area, or stop selling insurance in your city or state. In some cases, you may be dropped by your insurance company for reasons outside of your control, such as buying a new car.

If your insurance company drops you, your rates won't necessarily increase with another company. However, this depends on the reason for the non-renewal. If you are dropped for a serious offence, such as a DUI, you will likely see a rate increase with another insurer.

In the case of non-renewal, your insurance company must notify you in writing a set number of days before your current policy ends. This time frame varies by state, from 30 days in Oregon to 45-60 days in New York. The written notice will include a reason for non-renewal, which is often required by law.

If you receive a letter of non-renewal, you can contact your insurer for more information or to dispute the non-renewal if you feel it is unjustified. Some states have restrictions on the reasons insurance companies can choose not to renew a policy. For example, in New York, insurance companies cannot issue a non-renewal based on your age. If you believe the reason for your non-renewal is illegal, you can contact your state's department of insurance for clarification and to file a complaint.

After a non-renewal, you will need to find coverage from a new insurer. It is important to ensure that your new policy takes effect before your current policy ends, as there is no grace period after non-renewal. Check with multiple auto insurance companies to find the best rates, as it is possible to pay less for coverage with your new insurer.

Your insurer must notify you in writing

If your car insurance company decides not to renew your policy, they must notify you in writing a set number of days before your current policy ends. This time frame varies by state, ranging from 10 to 75 days. For instance, in New York, you must receive a notice at least 45 to 60 days before the expiration date, while in Oregon, the minimum notice period is 30 days.

The written notification should include the specific reasons for non-renewal, which is often required by law. The insurer cannot simply state "fraud" or "misrepresentation" but must provide a factual basis for their decision. Additionally, the notice should inform you of your right to appeal the non-renewal and the option to purchase insurance from a state plan if you cannot find coverage elsewhere.

It is important to note that non-renewal can occur for various reasons, such as multiple accidents, filing too many claims, or even through no fault of your own. For example, the insurer may decide to reduce its number of customers in your area. Therefore, it is crucial to review the written notification carefully and take the necessary steps to ensure continuous coverage, as driving without insurance can lead to legal consequences and higher rates.

If you believe your insurer has not followed the required procedures or if you disagree with the reasons for non-renewal, you have the right to appeal the decision. You can start by contacting your insurer to discuss the matter and, if necessary, reach out to your state's insurance department for clarification and to file a complaint if the reason for non-renewal is illegal.

You can contact your insurer to argue your case

If your car insurance company decides not to renew your policy, you will receive a written notification informing you of this decision and explaining the reason for it. This usually happens when the insurance company considers you a riskier driver than when you initially purchased the policy. For example, you may have received a DUI or multiple moving violations, like speeding tickets.

However, if you feel that the non-renewal of your policy is unjustified, you can contact your insurer to argue your case and request further information. It is within your rights to do so, and your insurer is obligated to provide you with a clear and specific explanation for their decision.

Additionally, some states have restrictions on the reasons insurance companies can choose not to renew a policy. For instance, in New York, insurance companies cannot issue a non-renewal based on your age. If you suspect that the reason provided by your insurer is illegal or unjustified, you can contact your state's department of insurance for clarification and to file a complaint.

It is important to remember that non-renewal is different from policy cancellation, which can occur during the term of the policy and is often a result of serious issues such as loss of driving privileges, insurance fraud, or non-payment. Non-renewal, on the other hand, happens at the end of the policy term, and your insurer is required to provide you with advance notice, usually between 30 to 60 days before the expiration date.

You can cancel your policy within 14 days of renewal

If you want to cancel your car insurance policy within 14 days of renewal, you should be aware of the following:

First, it's important to understand the difference between cancellation and non-renewal. Cancellation can happen during the term of the policy or when the policy term is ending. On the other hand, non-renewal occurs when your insurance company discontinues your policy at the end of the coverage period.

In most states, insurance companies can't cancel your policy if it's been in effect for more than 60 days unless there are specific reasons such as insurance fraud, non-payment, a DUI conviction, or suspension/revocation of your driver's license.

If you decide to cancel your policy, you should contact your insurance provider to understand their specific cancellation process. Some companies may require you to pay a cancellation fee or give advance notice before your cancellation date. You may also be required to sign a cancellation letter or submit a request for cancellation in writing.

It's important to note that you must have another policy in effect before canceling your existing coverage to avoid a lapse in coverage, as driving without insurance is illegal in most states and can result in higher future rates and fines. Therefore, it's recommended to purchase a new policy before canceling your existing one, ensuring that the start date of your new policy aligns with the intended cancellation date of the old policy.

When you cancel your car insurance, you might be eligible for a refund if you had paid for your coverage in advance. However, you may also be subject to a cancellation fee, depending on the company and state regulations.

Additionally, if you are selling your car, it's recommended to maintain coverage until you fully complete the sale, including signing over the title to the new owner. In some states, you may also need to submit a Notice of Release of Liability to your state's Department of Motor Vehicles.

Frequently asked questions