Lapse in Auto Insurance Coverage (How it Affects Your Rates in 2024)

A lapse in auto insurance coverage can raise monthly rates by 8% or more and lead to significant penalties. Even a single day without coverage can result in higher premiums, so it’s vital to understand these impacts and find affordable coverage to prevent long-term financial and legal issues.

No matter the situation, getting car insurance after a lapse can quickly become an expensive headache, with potential fines for lapse in car insurance. Comparing auto insurance companies and starting a new policy can be overwhelming.

Below, we’ll explain how to navigate getting back on the road with an affordable, legal insurance policy. Use our FREE quote tool to compare insurance rates now!

Lapse of Coverage Penalties

If your car is still registered with your local DMV, but your insurance coverage gets canceled for whatever reason, you won’t just be in trouble with your insurance company — you’ll be in trouble with your state government, too (the only exception to this is if you sell or transfer ownership of your vehicle before canceling your coverage).

Even if you don’t get cited for driving without insurance while you’re on the road, there are many states where insurance companies are legally required to inform your local DMV that you no longer have coverage and that you may be driving illegally.

A lapse in auto insurance coverage can lead to license suspension, hefty fines, and possibly the requirement to file an SR-22 to regain legal driving status.

You’ll have to check with your state laws to make sure you know what you’ll have to pay to achieve legal status once again, but some common types of fines include:

• A license reinstallment penalty costing anywhere from $14 (CA) up to $500 (MA). This fee is in some states and is likely to increase with multiple offenses.
• Instead of a flat fee, some states charge a small financial penalty for each day that you go without insurance. Depending on your state, this daily compounding fee may also be combined with a flat penalty starting on day one of your lapsed coverage. South Carolina drivers are lucky, though; their daily compounding fee is capped at a total of $200. Most other states will continue charging you until your coverage is reinstated and the fees are paid. Explore further with our article entitled “Cheap Auto Insurance in South Carolina.”
• In still other states, the laws are much more relaxed. North Dakota, New Hampshire, and Iowa have no financial penalties at all for a lapse in coverage. In Montana, they will be forgiving of your first lapse in insurance; but subsequent lapses will be subject to fines and legal penalties. In Missouri, nobody will know that your coverage has lapsed until you get pulled over by the police. But if you do get pulled over, you’ll have to face some very serious consequences.

Common Causes for a Lapse in Auto Insurance Coverage

There are many different you may end up suffering a lapse in your car insurance coverage. But the three main causes are either financial or circumstantial:

Missed Payments or Failure to Renew

This is one of the most common forms of coverage lapse. This is also the most common scenario in which your local DMV will be immediately notified that you are no longer carrying insurance coverage as required by law. And as soon as that happens, you can expect to deal with any of the financial penalties listed above. Gain insights by reading our article titled “Is it a bad idea to delay payments for auto insurance?.”

Moving and/or Traveling

Active duty military personnel and college students, whether traveling domestically or internationally for studies, are at high risk of coverage lapses since they might not use their vehicles for extended periods. If you’re in either group, many car insurance providers offer options to maintain your coverage while your vehicle is not in use. Some companies provide substantial premium discounts or even suspend coverage without charge under specific conditions. This is particularly relevant for those with military auto insurance.

Selling Your Car

If you sell your car for whatever reason and cancel your insurance coverage in turn, you’re going to find a tough time finding an affordable insurance policy if and when you decide to start driving again. It may not make any financial sense whatsoever to maintain a car insurance policy if you don’t own a car; but even if you had a perfect driving history in the past, the lapse in coverage still gives your prospective insurance company the right to charge you a higher premium — or to refuse to issue you a policy altogether. However, many insurers will start offering you a reasonable rate on your monthly premiums after you have maintained your new coverage for anywhere from 6 months to a year. Elevate your knowledge with our “Cheap Auto Insurance Companies.”

Nationwide
Allstate
Farmers
State Auto


15
30
45
60
75
90
105
120
135
150





$164
$148
$126



$155
$140
$94



$108
$104
$87



$108
$97
$87

How a Lapse of Insurance Coverage Increases Your Premiums

No matter what, there’s a very high likelihood that once you get your policy reinstated after a lapse in coverage — even if that coverage was for as little as a single day — you’re going to be paying higher premiums no matter what.

Many companies may only impose a minor rate increase—often as low as 8 percent or less—if the lapse was brief and you promptly worked to reinstate your coverage, according to auto insurance rates by state.

But if for whatever reason, it took you longer than 30 days to renew your policy or to purchase a new one, you can expect some substantial increases, as you can see in the chart below:

State Farm
State Auto
Farmers
Nationwide


20
40
60
80
100
120
140
160
180
200
220




$72
$156


$104
$206


$99
$187


$121
$233

What to Do If You Have a Current Lapse in Coverage

One of the worst things you can do when your insurance coverage lapses is to drive illegally. But this can be hard for many, especially if your lapse in coverage is caused by the fact that you were struggling to pay your premiums in the first place.

The consequences for driving illegally without insurance can be very expensive, and may even result in jail time depending on your state’s laws. Find out more by reading our “Fault vs. No Fault Auto Insurance Laws.“

The best thing you can do is to shop around for a bare minimum policy once you have a chance to purchase coverage once again. In the chart below, you can see examples of how expensive insurance premiums are for a liability-only policy (the bare minimum amount of coverage you must purchase in order to drive).

It may not give you complete peace of mind as far as what financial troubles you may face in the event of an accident or the need to file a claim. But it will at least keep you driving legally and give you the opportunity to save up for more coverage in the future.

Arkansas
Florida
California
New York
Texas
Washington
Virginia


10
20
30
40
50
60
70
80
90
100



$70

$90

$84

$87

$101

$54

$63

It’s going to be tough to recover from a lapse of insurance coverage, especially if your lapse is a long one. But there are things you can do to try and get a more affordable rate whenever you finally get to purchase a new car insurance policy.

You’re going to have to compare quotes between many more car insurance companies than the average driver, due to the fact that most providers will either charge you exorbitant rates or refuse you outright because of your lapse. But if you take a minute to use our fast, free quote generator, it’ll only take you a fraction of the time to find a reasonable rate. Discover a wealth of knowledge in our “Is it a bad idea to get multiple auto insurance quotes?.”

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