Will A Lapse In Coverage Affect My Rates?

If you let your insurance lapse for any reason, and for any length of time, you are probably going to wind up paying a little more than you’re used to the next time you sign up for a policy. Here’s what you need to know:

• Your car insurance will be a little more expensive when you first start driving again, but the rates will generally go back down over time with regular payment and safe driving.
• Raised rates will typically last around six months after buying a new policy.
• The reason you let your auto insurance lapse really makes no difference. Whether you sold your car or just forgot to pay your premium, it all means the same to the car insurance provider.
• Canceling a policy to switch to a new provider will help you to avoid these raised rates, as you won’t be going without insurance, but instead simply switching to a new plan.
• Your old insurer may charge a cancellation fee, but the fee is generally going to be smaller than the additional costs that you would pay on your new rates for simply letting the plan lapse.
• Your cancellation fee is typically going to be lower the longer you’ve been with your old insurer. Someone who cancels a policy after two or three years has been a better investment for the auto insurance company than someone who cancels it after just one month.
• The cheapest way to switch providers or simply drop a plan is to wait for your renewal date, and let your insurer know that you are not renewing this time. You may find that, even if you are not currently driving your car, it will cost you less money to pay off the next two months on your term than to cancel mid-term and be hit with a hefty cancellation fee or raised rates on your next policy. A cancellation fee may be anywhere from a mere twenty dollars to several hundred. Simply not renewing, on the other hand, is free.

For more reasons than one, insurance is one of those things that’s cheaper to buy than it is to opt-out of. If you find that you no longer need insurance, talk to your provider and find the best way to drop your plan so that you won’t have to pay extra the next time you need coverage.