Having car insurance is essential for anyone who drives. Not only does it provide protection for you and your car, but it is also legally required in most states. If you stop paying your premiums or let your coverage lapse, there can be serious consequences.
It can result in fines, higher premiums and even the loss of your driver’s license or registration. In most states, if you are caught driving without car insurance, you will be charged fines and other penalties. Learn more about these penalties and how much your insurance rates will go up after a lapse in coverage before you decide to drive without insurance.
What happens if your car insurance lapses?
If your car insurance lapses for any reason, the state may take away your driving privileges and fine you to reinstate them, even if you weren’t caught driving. That’s because if you have a vehicle registered under your name, the state assumes you’re driving it. And in every state but New Hampshire, driving without minimum liability insurance is against the law.
One out of every eight drivers doesn’t carry insurance, according to the Insurance Research Council.
Uninsured drivers have become such a costly problem — states are increasingly using electronic reporting systems to find out directly from insurers when a vehicle owner is past due on their bill. If that happens, you may not be charged with the crime of driving while uninsured, which can carry steep penalties. But in nearly every state you will have your registration, driver’s license, or both, revoked and then be charged a fine.
The DMV fees listed below are only for those portions of the costs and do not include criminal fines, court fees or other costs associated with driving without insurance.
Below are the fees charged by the DMV when a registered vehicle owner’s insurance has lapsed.
Can I keep my license plates and car registration during an insurance lapse?
To avoid these penalties, always turn in your license plates and cancel your registration if you plan to let your car insurance lapse. Contact your insurer, who will likely work to keep good customers. Insurers are supposed to give you a 30-day advance notice before canceling your policy.
“If you miss a payment, the important thing to do is get in contact with them right away,” says Bob Passmore, executive vice president and chief legal officer of the Property Casualty Insurance Association of America. “So, you’ll get a lot of opportunities to make it right.”
Is there a grace period for car insurance?
Most car insurance companies offer a grace period for missed insurance payments, so it should be fine if you’re a few days late. However, you should pay the premiums as soon as possible, as the grace period can vary by insurer.
How much will my rate go up if I have an insurance lapse?
A lapse in coverage for a week increases your insurance rates by 11% or about $226 a year. A 30-day lapse will hike your car insurance rate by an average of 14%, or about $269 a year. A 45-day lapse gets you a 22% increase, about $439 more a year, based on a 2022 data analysis by CarInsurance.com.
If you still want to suspend coverage, remember that even if you follow the law and submit your plates, you may still be charged more for insurance after you’ve had a lapse of, say, more than 30 days. Insurers say their statistical models show that drivers without steady, uninterrupted insurance coverage tend to file more claims, costing the insurance company more.
Some insurance companies won’t even take customers who can’t show six months of prior coverage, forcing drivers to shop from high-risk providers for as much as double the price.
“If you’re in that situation, there are a lot of companies that specialize in high-risk drivers,” says Passmore. “Shop around. They might only charge more for six months.
That said, some states don’t allow insurers to charge more if a lapse was due to overseas military service, hospitalization or job loss.
Here is how much more you will pay for car insurance in 2022, on average, if your insurance lapses for 45 days:
How do you buy car insurance after an insurance lapse?
Despite the challenges of buying car insurance after an interruption in coverage, it’s still wise to research rates. Each insurance company assesses risk differently, so even if you have a lapsed policy, you can still find a lower rate by doing a car insurance comparison. For instance, some insurers specialize in high-risk driver policies so that you may get a more affordable price from one of those carriers.
If you are changing your driving situation – you will still be driving frequently but won’t have a car – consider getting a non-owners car insurance policy to avoid a lapse in coverage.
Non-owner car insurance is often used by high-risk drivers who must buy a liability policy to keep a driver’s license. But it is also used by drivers who don’t own cars and rent frequently or are trying to keep continuous coverage.
A non-owner policy will generally cost much less than an owner’s policy. The average cost of a non-owners policy is $380, according to a 2022 CarInsurance.com data study. The low rate is because the insurance company’s risk is lower than for that of a car owner who drives daily.
The premium amount is, however, dependent upon standard rating factors, such as your driving record and where you live so you could pay much more than that.
Resources & Methodology
- Kelly Blue Book. “Penalties for Driving Without Car Insurance by State.” Accessed January 2023.
- Progressive. “What happens if my car insurance lapses?” Accessed January 2023.
- Insurance Research Council. “One in Eight Drivers Uninsured.” Accessed January 2023.
CarInsurance.com commissioned Quadrant Information Institute in 2022 to field rates for drivers across the nation after 45 days of lapse in insurance coverage for a full coverage policy with limits of 100/300/100. The rates are based on the profile of a 40-year-old single male driving a 2021 Honda LX.