Why Is It Important to Maintain Continuous Insurance Coverage?

It's important to maintain continuous insurance coverage with no lapses in order to avoid hefty fines for driving without insurance. You also don't want to be held liable in a car accident, and you will if you fail to maintain continuous auto insurance coverage. Automatic renewal settings can help you maintain continuous car insurance coverage and qualify you for loyalty and continuous coverage discounts.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Written by Rachel Bodine
Insurance Feature Writer Rachel Bodine

Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years Leslie Kasperowicz

UPDATED: Mar 11, 2022

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Insurance experts will frequently recommend maintaining continuous insurance coverage. Why is maintaining continuous coverage so important? What are the dangers of having your car insurance lapse?

Today, we’re explaining everything you need to know about the importance of maintaining continuous insurance coverage.

Reasons Car Insurance May Lapse

Some people simply forget to pay their car insurance bill. Others can’t afford their car insurance until their next paycheck. Here are some of the most common reasons car insurance may lapse:

  • You forgot to pay your bill
  • You don’t have the money to pay your bill
  • You sold your only vehicle
  • Your only vehicle broke down or was in an accident
  • You no longer plan on driving

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Why You Should Avoid Insurance Lapses

Some of the situations above may seem like legitimate reasons to let your car insurance lapse. However, even if you have a good reason for your car insurance to lapse, it’s often in your best interest to maintain continuous coverage.

Obviously, if you forgot to pay your bill or are unable to pay your bill, then lapsed car insurance can be very serious. In this situation, we assume you plan to continue driving your vehicle. If you get into a car accident after your car insurance has lapsed, then you will not be covered. You are also driving illegally, and you may face fines or vehicle impoundment if pulled over.

The three main reasons to avoid lapsed car insurance coverage include:

  • You can be held personally liable in an accident
  • You could pay hefty fines if caught driving without insurance
  • Insurance companies consider you a high-risk driver if you are caught driving without insurance, and your future premiums could nearly double

If you get into a collision while your insurance has lapsed, then you could be required to pay for all damage out of pocket. You are personally liable in this situation. Typically, your insurance company would cover your liability, paying any damages for medical expenses, lost wages, and other costs. If your insurance has lapsed, however, then you have no line of protection. The other driver can sue you. If the accident was severe, then your assets – like your home or investment accounts – may be seized. In extreme situations, you may even be forced to declare bankruptcy – all because you let your insurance lapse and drove without car insurance.

Benefits of Maintaining Continuous Car Insurance Coverage

Some of the crucial benefits of maintaining continuous car insurance coverage include:

Continuous Coverage Discounts: If your car insurance lapses for several months or a year, then your car insurance company may treat you like a new, inexperienced driver when you re-apply. Drivers who maintain continuous coverage are seen as lower risk and pay lower premiums.

You’re Covered When Driving Rental Cars or Borrowed Vehicles: You may not have a vehicle, but your car insurance can still apply in certain situations. Your car insurance acts as secondary coverage when driving a rental car or a friend’s vehicle, for example.

Avoiding High-Risk Status: Drivers who get caught without car insurance may be considered high-risk drivers the next time they apply for insurance. However, even if you canceled car insurance and didn’t drive at all, you could still be considered a high-risk driver when you re-apply for insurance. There’s a gap in your insured history. Your insurance company may see you as a riskier driver than someone without a gap. That means higher premiums.

So Your Insurance Lapsed – What’s Next?

If your insurance lapsed, and you want to continue being covered, then you have two basic options:

  • Call your insurance company and request that your policy be reinstated
  • Ask to be listed as a driver on a family member’s policy or a friend’s policy

If you are in good standing with your insurance company and have never lapsed before, then you should have no problem being reinstated. However, if you have a history of missing payments and letting car insurance lapse, then your insurance company might deny your reinstatement request. Or, you may have to pay higher premiums because you are now considered a high-risk driver.

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Exceptions to Lapsed Coverage Requirements

A rare few drivers are exempt from continuous car insurance coverage requirements, including:

If you are active-duty military, for example, then car insurance companies may make it easy to get insurance – even if you have been uninsured while deployed or training on base.

Newly licensed youth drivers, meanwhile, may be able to get listed under a parent’s policy with little issue. Your parents may list you on their policy while you’re home for the summer from college, then remove you when you return to college in the winter.

If you maintain continuous motorcycle coverage, then your insurer may consider this continuous coverage. If you recently downsized to a motorcycle from a standard vehicle, for example, then you may meet continuous coverage requirements even though you do not technically have car insurance. Not all insurance companies offer this exemption, so double-check with your insurer to make sure.

Final Word

When money is tight, it may seem like a good idea to cancel your car insurance or go without insurance for a bit. However, this is rarely the best decision. You are required to maintain continuous car insurance coverage by law (assuming you plan to continue driving).

Even if you do not plan to drive in the near future, it may still be in your best interest to maintain continuous car insurance coverage. You stay covered when driving a rental car or friend’s car, for example. You can also avoid higher insurance premiums because you don’t have a gap in your insurance history.

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