What Is Auto Insurance Lapse?

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   Tom Sheehan

   Agency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482

   An auto insurance lapse means that under the terms and conditions of the policy, coverage provided by that policy is discontinued.  Typically, a policy lapses for non payment of premium.  Coverage can be discontinued for other reasons, for example, if an insured decides to cancel the policy or, conversley, if the company decides to non-renew because the risk no longer meets the company's guidlines as filed with the state Insurance Department.  The State of CT, and many others, require that liability coverage be in force as a condition of the registration of a car.  Thus, if a car insurance policy lapses, and the state DMV therefore is notified, the result could be a fine or suspention of the car's registration or both.  Likewise, many car insurance companies will not offer coverage for those who have not maintained continuous coverage.  In a case such as that, the car ower would end up being offered coverage usually in a non-standard company at a much higher premium.

   Answered on May 9, 2013

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