What Happens If Your Auto Insurance Lapses?

A lapse in insurance happens when there is a gap in coverage and carries severe consequences in the state of New York.

Always make sure you have active auto insurance, regardless of your situation. For example, if you just moved to New York State and are purchasing a vehicle, you will need to purchase auto insurance before you register your vehicle with the DMV. If you register first, you might have a lapse in coverage.

Having an active auto insurance policy is just as important as maintaining current vehicle registrations, so always know when your policy expires and make sure to always have coverage in place.

What Causes Insurance Lapses?

insurance lapse nyMost of the time, lapses in insurance are caused by a failure to pay your insurance bill. Your insurance company will give you a letter stating that you need to pay your bill by a certain date. If they haven’t received payment by that date, then they will cancel your auto insurance policy. A lapse starts the day after they’ve canceled your policy and continues until you either A) reinstate your old policy or B) start a new policy.

Other times, insurance will lapse if the dates don’t match up. For example, if you’ve registered your vehicle on a Friday but your auto insurance doesn’t start until Monday, you’ll have a lapse in coverage over the weekend.

Can I Reinstate My Lapsed Insurance?

Whether or not you’ll be able to reinstate your policy will depend on different factors, but it’s critical to know that you do not currently have auto insurance! Do not drive your vehicle without insurance during this lapse in coverage and make it your top priority to get it active again.

Reinstatement of your lapsed policy will mainly depend on:

  • If you have a history of paying on time.
  • The amount of time the policy has lapsed. If it’s only been a couple of days, they will be more likely to reinstate than if it’s been a couple of months.
  • The willingness of the insurance company. Some companies value your business more than others.

If you are not able to reinstate your policy, then you will need to acquire a new insurance policy with a different company. This can be a big problem because many insurance companies don’t want new business from customers who have a history of not paying their bills, even if it’s just one time.

Once you find a company that will write your auto insurance, you’ll likely find that your rates are much higher than they were, all due to the lapse in coverage.

Penalties for Driving without Insurance

New York State has one of the lowest percentages of uninsured drivers in the nation, in part because the penalties of driving without insurance are quite severe. Drivers driving without insurance in NYS not only face traffic stop penalties but they also face insurance lapse penalties.

If your auto insurance lapsed and you are caught, you could face a traffic stop penalty of up to $1,500 for driving without insurance. You will also face a civil insurance lapse penalty. The civil penalty fees for a lapse are listed in the table below:

Days LapsedCivil Penalty
1 - 30 days$8 per day
31 - 60 days$10 per day
61-90 days$12 per day

To understand how this lapse penalty is calculated, consider the following example: For a 90-day lapse, you will pay a penalty of $900. $8 per day for the first 30 days ($240) + $10 per day for the next 30 days ($300) + $12 per day for the final thirty days ($360).  This gives us a total of $900.

In addition, if your driver’s license is revoked during this traffic stop, which will likely happen if you’re involved in an accident or receive a speeding ticket, then you will also need to pay a $750 fine to restore your license. This is in addition to the penalties for driving without insurance.

If it’s been over 90 days since your insurance lapsed, your license will be suspended for one year and you will not be allowed to pay the $750 fine to reinstate it.

If You’re Involved in an Accident

One of the worst-case scenarios is if you are involved in an accident while having a lapse in coverage. In this situation, you will still be required to pay the necessary fines. You will also be held responsible for paying for the other person’s damages and injuries. This amount will vary depending on the severity of the accident, but could easily be in the tens of thousands, if not hundreds of thousands of dollars that you’ll be required to pay out-of-pocket.

How to Avoid an Insurance Lapse

It’s critical to always be aware of when your auto insurance policy expires and renews. Always make this bill a top priority to pay to avoid potential lapses.

It’s also important to remember to carry a valid auto insurance ID card with you in your vehicle. Your insurance company will send you new ID cards with every renewal, so make it a habit to put the new card in your vehicle the moment that you receive it.

If you’ve opted to receive documents electronically, just make sure you are able to pull up your ID card electronically if you’re pulled over. Always make sure you can log in to see your policy and your ID cards.

Driving without insurance can easily be avoided by paying your bills on time and making sure you always have coverage.

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