Will Car Insurance Lapse Impact The Coverage Rates?
When you buy car insurance, the service provider will recommend that you pay for the policy on time. This way, you'll get the coverage benefits if you are involved in an accident and damages occur.
But if coverage lapses, you'll have to determine how to fix the issue immediately. This post will outline the basic things you should know about auto insurance and the steps to reinstate the coverage.
How Does a Lapse Happen?
A lapse occurs when you don't pay premiums as instructed by your insurance provider. This forces the insurance company to cancel the policy. The lapse can last a day or longer, depending on the situation.
If you are involved in an accident during this period, the provider will not provide coverage benefits. You will pay for all the damages and medical expenses out of your pocket. Car owners sometimes incur a fine or penalty after coverage lapses.
Will the Payment Delay Impact Costs?
In most cases, car owners who fail to pay their premiums on time are perceived as high-risk drivers. As you already know, insurance companies take on the risks on your behalf, so if you're a high-risk driver, the premium rate will be increased.
Some carriers even decline to provide coverage after the lapse. This means that you will have to get a new policy with another insurer which can be hectic. For this reason, you should strive to pay your premiums on time to avoid complications and ensure you are covered throughout.
Steps to Take After the Auto Plan Lapses
Dealing with this coverage setback immediately will help fix your problem. You will get a reasonable outcome regardless of your shortcomings. Some insurance providers give customers extra days to pay premiums before they increase rates or terminate the initial contract. So, immediately you realize that your policy has lapsed, take these measures to control the situation:
Talk to the Agent – Call an agent to verify if the plan has lapsed or it is just overdue. You may get an opportunity to pay the outstanding amount online and avert a lapse.
Confirm If You Have Additional Time – Most insurance companies give their customers a grace period so they can pay their premiums before the rates increase. Therefore, take advantage of this extra time to make your payments.
Get a New Plan – If the policy has lapsed and efforts to reinstate it aren't successful, you should work on getting another policy plan as soon as possible. Meanwhile, you should avoid driving until you acquire new coverage.
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