Getting Your Car Insurance Policy Reinstated

My Coverage Expired. What Are My Options Right Now?

Here are our top tips. 

Ask your current insurance company to reinstate your policy 

Insurance companies genuinely want your business—even if you’ve missed one or more insurance premium payments. Unfortunately, reinstating your policy sometimes means paying a penalty or having a higher monthly insurance rate than you expected. 

Still, it’s less expensive than getting caught (or worse, yet, having an accident) without any insurance at all. All you have to do is call your insurance provider and talk to them about your situation. Ask them what they can do for you in extending the payment date or putting you on a payment plan. And if you are considering another insurer, make sure you know the cost of reinstating with your current insurer first.

Switch to another insurance provider

Whether you’ve let your coverage lapse or not, this may be the opportune time to consider a new policy with another insurance carrier. Every insurance company is different in terms of rates and what products they have to offer. They may be able to reduce your rate by bundling other insurance you have (such as home or life) within one tidy package. Or you may find a lower rate on auto insurance alone. Car insurance is a highly competitive business, and with so many options, you are sure to find a carrier that suits your needs—perhaps in an even more customized way than ever before. 

Surrender your plates

If you’ve let your coverage lapse (or have decided you may have to soon), surrendering your plates to your local department of motor vehicles (DMV) will ensure that you don’t get financially penalized even further. In some states, lack of insurance voids your registration. Now you are looking at reinstating both your insurance and paying new registration fees. 

Chances are, however, that in a marketplace teeming with so many options, you’ll find something that can fit your budget.

How many times can car insurance be reinstated

Policy reinstatement should be a rare event, if it happens at all. Insurance providers may be lenient with a one-time occurrence, since many people have an issue once in a while with payments due to a lost the bill perhaps, or because a family crisis interrupted regular payments.

But if you apply to be reinstated more than once every three years or so, you run the risk that the company will turn you down, or increase your rates significantly. In that case, you may be better off making a fresh start at a new company.


FAQ: Car Insurance Reinstatement

How many times can I reinstate car insurance after cancellation?

The answer varies by insurance provider, but insurers don’t look favorably on those who habitually let their insurance policy lapse. They may charge you additional fees and increase the amount of your coverage each time. Additionally, they can eventually refuse you coverage altogether.

Can an insurance company cancel my coverage?

Yes, an insurance company does have the right to cancel coverage within what is called the “binding period.” Policy cancellation happens when an insurance company finds that a policyholder has additional risks they weren’t aware of when they originally wrote the policy. Insurance companies can also cancel a policy outside of the binding period if they find that you fraudulently received your policy, including giving false answers…or if you receive a DUI.

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Financial consequences

Driving without car insurance is risky. If you’re responsible for an accident and don’t have insurance, you may be sued to pay for the damages – and end up paying for everything, including the lawyer, out of pocket.

Benefits of Car Insurance Reinstatement

The main benefit of car insurance reinstatement is that it keeps your policy in force. You don’t have to get insurance quotes, which can be time-consuming and a bit of a hassle. It’s the simplest way to get coverage back on your vehicle.

Another benefit is continuing with the same insurance carrier you're already familiar with. You might already have their numbers saved into your phone and have an established relationship with an agent. If they're providing you with good customer service and competitive rates, it's simplest to stay with the same carrier.

Reinstating a policy without a lapse also means you’re not automatically high risk. Your premium may increase if your policy has a lapse, so a reinstated policy could be the cheapest way to go.

What if I no longer need car insurance?

If you’re not driving, you obviously won’t need auto insurance. Perhaps you’ll be traveling out of the country, biking, or just bumming rides off friends. Keep in mind, that if you get behind the wheel again, you might pay an increased rate. That’s because insurance companies may consider you a riskier driver than those who keep active policies.

Understanding a Reinstatement Clause

A reinstatement clause states when coverage terms are reset after the insured files a claim. Individuals and businesses purchase insurance policies to cover themselves from damages or losses caused by specific perils, such as fires and floods. Coverage is triggered when the damage or loss occurs, at which point the insured can file a claim to receive money to cover damages.

The amount that the insured can recoup from the insurer is set at a maximum amount, called the coverage limit. This limit may be set on a per occurrence, per risk basis, or aggregate loss basis.

Insurance companies that are still processing a claim may want to limit any further coverage for an insured customer until the current claim is paid out. In order to be covered from future damages while an existing claim is still active, the insured customer would have to make sure that the policy is reset after the first damage or loss and the coverage is renewed right away. This is done through a reinstatement clause.

Reinstatement clauses indicate the point at which coverage restarts. The restart may be triggered by a claim being filed or by a claim being paid out by the insurer. Additionally, the clause will indicate whether the coverage limit is reset or whether the same limit applies.

What happens when your car insurance is canceled for missing a payment?

If you miss a car insurance payment, you’ll receive a legally required notice of cancellation from your insurer. This notice may come in the mail or by a phone call or email.

You’ll usually have 10 to 20 days between the date of the cancellation notice and the date you are no longer covered. The exact amount of time differs by state. After that, your insurance will officially lapse and you’ll no longer be able to drive your car legally. In some states, letting your insurance lapse also voids your registration — either right away or a few weeks after your insurance lapses. But no matter where you live, the longer you wait before rectifying the problem, the greater the consequences will be. So make sure you contact your insurance company immediately.

Long-term consequences of canceled insurance due to missed payments

If your car insurance lapses or is canceled, whether it’s because of nonpayment or any other reason, you will likely face financial ramifications of some kind. The consequences can continue even after you have reinstated your insurance. Here are some possible outcomes of missing your car insurance payments.

Administrative fees at the DMV: Some states will charge you for even a brief lapse in insurance coverage. For example, in New York, drivers have to pay $8 per day for up to 30 days during which their insurance was lapsed, with increased penalties thereafter. Car registration or driver’s license suspension: Nearly every state requires drivers to insure their cars in order to register them, and many states require insurance companies to notify them if you let your insurance lapse. This could result in the automatic suspension of your car’s registration or your driving privileges, leaving you unable to legally drive. You might even be required to carry an SR-22 if you are caught driving while uninsured, especially if you cause an accident. Higher auto insurance rates: Insurance companies like to see that drivers can reliably pay their bills on time every month. People who let their coverage lapse, even for a short amount of time, will likely see an increase in car insurance prices the next time they renew. Repossession of a loaned/leased car: Most car lenders require you to maintain full insurance coverage on the vehicle as long as the vehicle is financed. If your car lender finds out you are not carrying insurance on the vehicle, it may repossess the car. Your credit score can drop: If you owe money on your car insurance and your insurer passes the debt to a collection agency, it will likely impact your credit score. This can affect your ability to get a credit card or loan, and the derogatory mark will remain on your credit report for up to seven years.

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