What Constitutes a Gap in Auto Insurance Coverage?

In today's busy world, it's easy to be forgetful. We may forget to take out the trash, forget to set the alarm clock or forget what time to pick up the kids for soccer practice. It's easy to get caught up in work and other obligations, and sometimes things slip through the cracks. However, one thing you do not ever want to forget is when you have to renew your auto insurance or additional car policies as well.

The good news is, your provider will generally send you a notice in the mail a few weeks before your policy is set to expire, and they will include a quote for the next policy period's premium amount. This gives you plenty of time to either choose to renew or investigate other opportunities.

It's always a good idea to check out quotes from other providers to make sure you're not spending more money than you need to. Often, if you are renewing the same policy year after year or period after period without comparing quotes, you could be paying too much. However, make sure you know when your policy period will end so you know your deadline for either renewing or choosing another plan.

If you forget to renew your plan and do not choose another plan, the time between the point when your previous policy ended and the point when you finally obtain new coverage will be considered a gap in coverage. While this might not seem like a big deal, it can actually have huge repercussions. These repercussions can also have a negative impact on your wallet.

For example, assume you've forgotten to renew your policy and your plan has ended. If you are pulled over after that point, you will be considered uninsured. Every state has its own penalties for uninsured drivers, and the penalties usually include fines and points on your license. Eventually, after a certain number of points or amount of times caught without insurance, your license will be suspended.

Even worse, if you get into an accident without coverage and you are found at fault, you will have to pay all the costs out of pocket. These costs can include car repairs, medical fees, legal fees and even lost wages for the other driver if they are injured and kept out of work. In other words, you could rack up thousands of dollars of debt just by failing to renew your policy.

If you have a lapse in coverage on your record, it will impact your future auto insurance rates. When you apply for coverage and the company sees that you went a period of time - even just a week - without coverage, you will be considered a risk and your rates will be much higher than if you did not have any gaps in coverage.

There are exceptions to lapses in coverage in which you will not be penalized, however. For example, if you moved to a new city and decided to use public transportation instead of keeping a car, then you will not be penalized. Or, if you move to another country temporarily and do not drive, and then return, you will not be considered a risk when you reapply. However, you must turn in your plates and officially cancel your policy in order for this to hold true.

If you're considering cancelling your policy because you're no longer driving, then it's a good idea to call your agent and find out exactly what you need to do to end your policy officially. When it comes to gaps in auto insurance, it's always better to be safe than sorry.