If you fail to pay your premium on time, your insurance company has the right -- after providing you with notice in the time specified by your state's law -- to cancel your car insurance policy. (See "A minute past midnight: Poof! You're uninsured")
In some cases, you may simply receive an overdue notice, asking you to pay the past-due premium plus a late fee. This will allow you to reinstate your auto insurance, if it ever lapsed.
Many car insurance companies will reinstate an auto policy that has been canceled due to non-payment, if the gap in coverage with it has been less than 30 days and there have been no accident or losses during the time you were without coverage. For a reinstatement of your policy to be possible, you'd normally be required to sign a statement of no loss.
A no loss form has you certify that there were no losses, accidents or circumstances that might give rise to a claim during the time from the cancellation date to the reinstatement date.
This statement is required so policyholders clearly understand that they can’t make a claim for anything that occurred during the lapse in coverage. Losses that occurred before the lapse, when the policy was still valid, or once the policy is reinstated, would be covered by the policy.
If your previous auto insurance provider won't take you back, or raises your rates due to the gap in coverage, then it's time to shop around to get the cheapest auto insurance premium possible. Comparison shopping can save you hundreds, if not more in premiums, even if you've had a gap in coverage.