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- Collision insurance covers your vehicle for damage sustained when it hits or is hit by another car or object.
- If you have a loan or lease on your vehicle, your lienholder will require you to carry this coverage and may mandate the specific deductible amount you must select.
- Not every issue with your vehicle is covered by collision or comprehensive insurance, such as damage caused by wear and tear, freezing or mechanical breakdown.
Will I face penalties if I turn in a tag from a vehicle with lapsed insurance but have insured another vehicle? If you’re wondering about the consequences, it’s essential to understand that if your old tag remained active after your insurance lapsed, there’s a risk that the DMV may impose penalties when they discover the insurance coverage gap.
In many states, vehicles must carry continuous insurance if the registration and tags are still valid, and a failure to do so can result in fines or a suspension of your registration privileges.
Turning in your old tag could trigger a review of your coverage history and lead to penalties if your DMV sees that the vehicle was effectively uninsured for an extended period.
What penalties might I face if my insurance lapses while the tag remains active?
You could face fines, late fees or even a suspension of your registration or driver’s license, depending on your state’s regulations. In many places, any vehicle with an active tag must have continuous insurance coverage, and failing to maintain that coverage can result in penalties once the state becomes aware of the lapse.
The severity of these penalties varies, but they often include paying a set fee for each day or month of lapsed coverage and possibly reinstatement fees for the registration.
Can I transfer my old tag to a new vehicle?
In some states, you can transfer a valid tag to a new vehicle, but you generally need to clear up any issues or penalties related to the old vehicle first. This might involve confirming that there were no lapses in insurance coverage or paying any outstanding fees.
Once everything is settled, you’ll typically need to complete the appropriate transfer paperwork with your state’s DMV, provide proof of insurance for the new vehicle, and pay applicable transfer fees.
Final thoughts
Before registering a new vehicle, contact your DMV to see if you owe any outstanding fees or penalties for the lapsed coverage on your old tag.
In some cases, proving that the vehicle was not in use or sold before the lapse might help reduce or eliminate penalties. You’ll also need to show proof of insurance for your new vehicle.
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