If you were to guess what is more important in a car, wheels, or auto insurance policy, what would you pick? If you picked wheels, congratulations, you are sane. But if you picked auto insurance, you know how essential and vital an insurance policy for your car is. A vehicle without won’t move, but driving a vehicle without auto insurance can bar you from driving a vehicle, along with hefty fines and probably some jail time.
There are over 6 million passenger car accidents in the US each year, and this is from 2019. The number has risen ever since. This is the reason why in almost every state it is mandatory to have some auto insurance to legally drive. But what happens if you don’t? What if your auto insurance expires and you still drive your car? That’s exactly what the insurance gap is and this article will talk about everything you need to know about it.
What is Insurance Lapse
Now that you know how important auto insurance is, it is very important to have active auto insurance. Every average car insuring process has the same renewal period. The most common is one year. This means that you need to renew your auto insurance policy every year. Failure to renew the policy will result in the termination of the policy.
The period in which you do not have an active insurance policy is considered an insurance gap or insurance lapse and it is far more serious than what you’d imagine. Even if you intend to get another insurance policy, it is better to do it while your previous policy is active. We’ll explain why preventing an insurance lapse matters, but first, let’s talk about the grace period and other terms related to an insurance lapse.
Grace Period
Every insurance company, not only auto insurance, notifies policyholders ten to twenty days before their policy expiration date to get it renewed. This is when you should make the payments and be safe. Once the expiration date passes, you might get a grace period.
A grace period is a short period that insurance companies give you to renew your period. So if your expiration date has passed, you might get an extra fifteen or thirty days to renew the policy. Some companies offer it for free while some might charge a little bit extra money. Grace period is your only chance to save the insurance. If you miss it, then there is no way of getting your insurance renewed and you’ll have to start fresh.
Why Insurance Lapse Matters
Let’s say that you do not plan to drive your car for a month or so because of a trip or a vacation. And just around that time, your auto insurance will be expiring. So what’s the point of renewing your car insurance, right? Just let it sit for a month or two and when you come back, you’ll get a new policy, even a better one if you have been planning to switch policies. This would be problematic, even if you don’t drive your car.
Here’s what insurance lapses do to your auto insurance policy when you either drive or don’t drive a car.
When You Drive a Car
Driving a vehicle without the mandated auto insurance is not only illegal and considered a felony in almost every state in the US, but it can also result in a huge financial loss for you. In almost every state, it is mandatory to have liability insurance which insures the other person who might get affected in an accident caused by you. It covers property damage and bodily injury.
In some other states, 12 to be exact, it is mandatory to have personal injury protection coverage as well. This policy will cover all your injuries in an accident, regardless of whose fault the accident was.
If caught driving without any insurance, you could get:
- Your car impounded
- Your license suspended
- Fine up to $5,000
- A trip to the prison
These were the legal ramifications of driving a car without auto insurance. But what about the financial ones? If you get in an accident and it is deemed to be your fault, you’ll have to pay hundreds of thousands of dollars from your pocket to cover the damages, for the other person and yourself. Considering the high prices of medical treatments and repairs, you could be looking at a couple of hundred grand at least!
Yes, driving without auto insurance is dangerous, but what’s the harm in not having auto insurance and keeping the car parked? Let’s take a look at that.
When the Car is Parked
Keeping the car parked without insurance will save you from heavy fines and criminal charges, but it can affect your auto insurance rates. Failure to renew your insurance policy will increase your policy price, no matter which auto insurance company you choose later. Insurance companies see policy gaps as either inability to pay the premiums or the insurance company dropping you for some felony, both not good for you.
So if there is an insurance gap, the next time you go to get a new policy, you’ll be seeing a higher price. Letting your previous insurance policy expire also means you may miss the no-claim bonuses (which are given when you don’t make any claims during the policy period).
So pay premiums on time and avoid getting an auto insurance gap. Not only will it save you a lot of money, but ensure that your insurance rates are low while you get discounts.
