Auto Accidents and Lapsed Insurance

Letting your car insurance coverage lapse probably isn't a great idea, regardless of whether you end up getting into an accident while you're an uninsured driver.

In most states, car insurance is mandatory. This means you typically cannot obtain registration for your vehicle unless you provide proof that it's insured in line with the state's coverage requirements. And, while you do not have to obtain car insurance in order to get a driver's license (since a license is simply a form of identification, and not all people have a car to insure) your failure to insure your vehicle can result in the loss of your driver's license. For these reasons -- and a host of others we'll cover in this article -- it's never a good idea to let your car insurance coverage lapse.

Lapsed Car Insurance Policies and the "Grace Period"

Like all other kinds of insurance policies, car insurance policies have an expiration date beyond which the policy ceases to remain in effect. You will receive renewal notices from your insurance company telling you the date by which your premium must be received in order to avoid cancellation of your policy. This notice will also include a "grace period" that extends beyond the premium payment due date, and which gives you a specified amount of additional time to pay your premium and still be covered in the event of an accident.

Whether you fail to remit timely premium payments during the policy term, or for a renewal term, the result will be the same -- your policy will be cancelled or lapse, and you will no longer have car insurance to protect you from the risks of a car accident. In other words, for all practical purposes, having lapsed car insurance coverage is the same as having no car insurance coverage at all.

Driving Without Car Insurance

If you decide to drive without car insurance, you expose yourself to the loss or suspension of your driver's license; the suspension of your vehicle registration; tickets and fines; the impounding or repossession of your vehicle; and even jail time.

Any of these things can happen just for getting pulled over for a minor infraction; they have nothing to do with how good or careful a driver you are. When you are involved in a traffic stop, the police officer will ask for your license, registration and proof of insurance, and if you can't produce proof of insurance the above-listed consequences will likely ensue.

Things get even worse when you drive without car insurance and are involved in an accident with another driver. Since car insurance typically provides coverage for your own property damage, medical bills, wage loss and replacement services, you will have to bear all of these costs and expenses on your own. If you are badly injured and cannot work for an extended period of time, these losses will be significant. In addition, if you are at fault in the accident, you will be personally liable for the injuries suffered by all other persons, including any passengers in your vehicle and the occupants of other vehicles involved. Depending on the number of persons injured and the severity of their injuries, you could wind up with a judgment against you so large that it could require you to declare bankruptcy.

Learn more about getting sued for a car accident when you're uninsured.

Lapse Now, Pay More Later?

If you let your car insurance coverage lapse, for whatever reason and for whatever amount of time, once you do decide to purchase another policy, you may find you're now a higher risk driver in the eyes of the insurance company. That means you can expect to pay (sometimes significantly) higher premiums, at least until you've had continual coverage for a reasonable amount of time.

Bottom line: While there are many people driving without insurance because they simply can't afford the premiums, no one should be making the conscious decision to be an uninsured driver. The risks are far too great, both to the driver him/herself and everyone else on the road who will be left with little recourse in the event of an injury-causing accident.

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