How to Get Auto Insurance After a Lapse in Coverage

Did you know that if you have a lapse in coverage, it could cost you? Going without car insurance for a time is considered a lapse in coverage. Even if you had good intentions or let it lapse for innocent reasons, it is a lapse. Insurers view coverage lapses as risky behavior that could leave them on the hook for more claims and bigger payouts. And, they’ll charge you higher rates to compensate. 

If you have a lapse in coverage for auto insurance, you could be paying higher premiums for a year or more as you rebuild your insurance record. 

About 15% of drivers let their coverage lapse, according to a 2023 TransUnion report. If you’ve had a lapse in your car insurance coverage, it is possible to get covered again. We’ll help you identify ways to avoid a coverage lapse, even if you’re preparing for deployment or a permanent change of station (PCS) move. You’ll also learn how to reinstate your coverage after a lapse and ways to keep your premiums manageable.

What Counts as a Coverage Lapse?

Any gap in continuous coverage could count as an insurance lapse, but there are several common situations you should watch out for:

Missed Payments

If you forget to send your premium payment, or send it in late (past your insurer’s grace period), your insurer could cancel your policy. Policy cancellation means you no longer have valid insurance coverage. 

Some insurers offer a short grace period for late payments, but the length varies by company and state. Typically, a payment that arrives a day or two late doesn’t result in a cancellation. However, a grace period is just that–grace extended by your insurance carrier. They can still cancel your policy for nonpayment if you don’t pay your premium on time.

Letting Your Insurance Expire

If you don’t renew the policy and pay the premiums to extend your term, your coverage will lapse, and you’ll be left without insurance. Even a one-day gap between policy terms can count as an insurance lapse.

Insurer Nonrenewal

Sometimes, your insurer will decide they no longer want you as a customer, even if you’ve been making your payments on time. They can decide not to renew your coverage at the end of the insurance term. This could be because they’re writing fewer policies in your area. Or, it could be because of something you’ve done, such as being cited for a DUI.

If you don’t take steps to find coverage elsewhere before the policy ends, you’ll face a lapse in coverage.

Canceling Insurance

Canceling insurance before a deployment is a common mistake military members make that causes a lapse in coverage. They assume that since they’ll be deployed and not using their vehicle, they might as well cancel coverage and save the money. Some insurers offer storage or reduced-coverage options during deployment that can help you avoid a lapse in coverage.

Fully canceling your policy can create a lapse. This is especially true if you still own a registered vehicle, as carrying valid auto insurance is a registration requirement in most states. Even if you sell the car, you should still make sure to surrender your plates to ensure it’s no longer registered in your name. Any vehicle still registered to you when you don’t have insurance could trigger a flag for coverage lapse on your insurance record.

Common Military Reasons for Insurance Coverage Lapses

As a military member, you face constant transitions that most civilian drivers don’t, which can make it easier to accidentally let your insurance lapse. Some of the more common military-related reasons for a gap in coverage include:

Deployment Confusion

As mentioned earlier, when you’re preparing for deployment, you might be unsure of what you need to do about day-to-day matters like car insurance. How will you pay your premiums? What are you paying for if you won’t be home to drive your vehicle? Will your family members continue to drive the vehicle?

Although it seems to make sense to cancel your coverage or let it expire to eliminate the hassle, that just creates new problems. Not only could you face a tougher time finding affordable insurance when you return, but going without insurance means you’d be on the hook financially if anything happened to your car while you were away.

Overseas PCS

An overseas Permanent Change of Station (PCS) move to an area Outside the Continental United States (OCONUS), brings even more complexity. Will you be able to bring your vehicle? Regulations allow for only one privately owned vehicle per family to be shipped for an overseas duty assignment, if authorized by your PCS orders. Otherwise, you may need to sell or store it. Will you need overseas car insurance? You may be tempted to go without the car and cancel your insurance, but that could still cause a gap in your coverage record. 

Storing Vehicles

If you’re storing your vehicle on base, at a commercial storage facility, or at a Vehicle Processing Center (VPC), you’ll still need to maintain insurance. This is especially true if you have an auto loan, as most lenders require you to maintain collision and comprehensive on a financed car. As with other situations, you may be tempted to forgo insurance, but it’s not a good idea.

Changing States and Missing Registration Requirements

If you’re moving every year or two, it’s easy to lose track of the registration requirements for your current state of residence. You might not realize you forgot to update your registration, or perhaps you thought you had 60 days to complete it, when you only had 30 days. In cases like these, it can be all too easy to accidentally let your insurance lapse.

Why Insurance Is More Expensive After a Lapse

Auto insurers are in the business of evaluating risk. They use historical data and sophisticated risk modeling techniques to assess their expected losses and price their products accordingly in order to stay profitable.

Armed with all of that data, they examine your driving history and insurance record to decide your risk profile, including the likelihood you’ll file a claim and how costly that claim might be.

Since their risk assessment shows that uninsured drivers are more willing to take serious risks, like driving without insurance, they charge higher premiums when your insurance record shows a coverage lapse.  

Insurers use this risk-based pricing approach to offer the same coverage at different price points depending on your risk profile. When your risk profile shows you are less likely to be involved in an accident or file a claim, then your premiums are usually lower. However, it can take months to rebuild a history of continuous coverage. So, your rates will likely stay high even after you reinstate coverage.

Not only will insurance be more expensive, but you may lose your insurance discounts. Depending on your state, a lapse can also trigger penalties such as fines, registration suspension, or reinstatement fees.

How to Get Auto Insurance Again

Regardless of why you lost auto insurance coverage, it’s important to get covered again. Here’s how.

Compare Insurers

Compare rates from at least three insurance companies to find good coverage at a good price. Most people (77%) only shop one or two insurers before choosing coverage, which means they could be overpaying. Check rates for similar coverage limits and deductibles for the most accurate comparison.

Consider Non-standard Insurers

Going without insurance in the past could mean your selection of insurers is limited. If standard carriers won’t cover you, even at higher rates, or if you need an SR-22 (certificate of insurance or a financial responsibility filing) filed with your state, you might need to turn to a non-standard insurer to get covered. These insurers specialize in policies for high-risk drivers. Although premiums may be higher, it can be worth it to begin rebuilding your coverage history.

To find a company that offers nonstandard insurance, the Insurance Information Institute recommends contacting your insurance professional or your state’s department of insurance. You can also search for “Automobile Nonstandard Liability” or “Automobile Nonstandard Physical Damage” on the Roughnotes website, an industry publication that lists nonstandard insurers by state. Some insurance companies offer nonstandard insurance in addition to standard policies, while others, like Dairyland, specialize in covering higher-risk drivers.

Maintain Continuous Coverage Moving Forward

Take steps to ensure your policy doesn’t lapse again. This could mean setting up autopay, so you don’t miss a payment, or making sure to keep coverage during your next deployment. Remember, with some insurers, you can choose to suspend coverage during deployment instead of canceling it. That can reduce your costs while keeping you insured.

Improve Your Driving Record

Since insurers are so attuned to your risk profile when setting premiums or even when deciding whether to cover you, it’s worth it to be extra careful. Accidents and violations can stay on your record for several years, depending on your state, driving up your premiums and making insurance more expensive. Avoid situations that can lead to accidents, obey all traffic laws, and drive the posted speed limit. It could help to take a defensive driving class as a refresher — and then you might be eligible for a safe driving discount, too. 

How Military Members Can Reduce Higher Premiums

Even with a lapse in coverage in your insurance history, you can take steps to reduce your premiums. Here are a few ways you can save on military car insurance.

Safe Driver Programs

Many of the best auto insurers offer discounts for safe driving, rewarding you for maintaining a streak of accident-free driving. But there are even bigger discounts available when you sign up for a safe driver program, known in the insurance industry as telematics. These programs track your driving habits with an app on your phone (or a device in your car). They know if you’re speeding, texting while driving, or braking suddenly. If you can keep up with safe driving habits, you can save money on your insurance when it’s time to renew.

Military Discounts

Many insurers offer discounts to active military members, veterans, and their families. Some, like USAA, specialize in tailoring auto insurance to military members. You can find specialized military discounts for things like storing your vehicle during deployment or garaging it on base. Always ask what discounts you’re eligible for so you don’t miss out.

Bundling Policies

Often, combining your homeowner’s or renter’s insurance with auto insurance from the same provider can save you money. Ask your insurer whether they offer bundle discounts, and run the numbers to make sure bundling is more affordable than buying each policy separately.

Increasing Deductibles

Raising your deductible typically lowers your premium, because you’re taking on more of the cost after filing a claim. If you can afford it, see what raising your comprehensive and collision deductibles will do to your rates. It could be a good way to bring your costs down until your coverage lapse is no longer an issue.

Bottom Line

Coverage lapses happen, especially during major life transitions like military service. If you’ve had a gap in coverage, it’s possible to recover quickly. Take steps to get covered as soon as possible, and put some strategies in place to prevent it from happening again, such as autopay or suspension during deployment. 

As you maintain continuous coverage (and safe driving habits), you’ll rebuild your insurance history. And, eventually, your premiums will become more affordable again.