Driving without car insurance can get you in both legal and financial trouble. Forty-nine states require drivers to have car insurance. Liability insurance pays for the repairs and medical treatments of the other driver needed after a road accident that is your fault.
Driving without liability insurance is a felony in most states. But that is not the only part that should worry uninsured drivers. If someone gets in a car accident without liability insurance, the entire cost of repairs and accidents must be covered by the uninsured at-fault driver.
The cost of car accidents can reach up to a million dollars or even more. Nobody wants to get in a financial accident after they have been in a road accident. So it has been established that auto insurance is necessary and essential.
But what happens if due, for some reason, your car insurance policy is canceled? What are the steps to get your auto insurance reinstated? Let’s take a look at the reasons why your can insurance might get canceled and the process of reinstating it in detail.
Policy Cancelation and Its Repercussions
There are many reasons why your car insurance policy might get canceled, and none of these reasons is a valid reason for auto insurers to consider and not get your insurance rates up.
A period when someone has a car registered to their name but no insurance policy (mandatory policies such as liability insurance, personal injury protection plan, uninsured motorist coverage, etc.) is called an insurance gap.
Insurance gaps or gaps in coverage is one of the worst things that can happen to your auto insurance budget. A gap is frowned upon by every auto insurer, and it results in increased insurance rates.
Let’s take a look at all the different reasons why someone might have a coverage gap.
No Policy Renewal
The most common reason why people have coverage lapse is when they forget to renew their car insurance coverage. Auto insurance policies are only in effect for a period of time, usually one year or six months in some cases.
After the policy period, the policyholder must pay a renewal fee annually or bi-annually to keep the policy in effect. It is where many people forget to renew their policy, and after a few days, the policy is canceled.
Grace period: Grace period is a term that many people might have heard as it is used in not only auto insurance but many other services that work on a subscription basis. The grace period is an extension of usually around 30 days past their policy-end date.
People need to remember to renew their policies all the time. So auto insurers offer a grace period of around 30 days to repurchase it at no extra cost. Failure to renew their policy even after the grace period will lead to policy termination.
License Suspension
Breaking the traffic law, driving under the influence, or other illegal activity can result in your driving license getting suspended. Once the auto insurance company gets to know that you are not allowed to drive, they might drop you from the policy.
It depends on the car insurance company how severe the action they are going to take. But getting your license suspended is never a good look, and car insurance companies will take some action for it.
Insurance Fraud
Insurance fraud is the most severe thing a driver can do to get dropped (and probably banned) from an auto insurance company. The felony part of the equation is a whole different thing that could lead to more significant troubles.
Insurance fraud is when the policyholder lies about some facts or makes a false claim to take the insurance money. There is a whole range of insurance fraud that people do, and getting into details would take another article.
Suffice it to say, in case of insurance fraud, getting the insurance policy reinstated is extremely difficult and requires a lot of legal processes.
How to Get Your Policy Reinstated
Getting your car insurance policy reinstated can either be very easy and straightforward or highly complicated and challenging. It depends on how and why your car insurance policy was canceled. Let’s take a look at the easy ones first.
Non-Renewal of Policy
Forgetting to renew your car insurance policy is one of the most common reasons why people might need to reinstate their auto insurance. It is the reason why auto insurers give a grace period.
Policyholders are informed about their expiring policy through emails, calls, or text messages. After the renewal date passes, they get reminded that their grace period has started.
The most brilliant move would be to renew your policy before the grace period is over. After the grace period is over, your policy will expire. You will have to buy the same policy at an inflated price.
Even if you choose a different company, you still have to pay higher insurance rates because of a gap in your coverage. If the gap was of a few days, talking to your insurance agent might help in not charging anything extra, but that is a rare case.
Once your policy expires for any reason, you will have to repurchase the policy at an inflated rate. If you want to avoid going back to your previous car insurance company, then consider switching.
But only switch after comparing all the car insurance providers in your state. For example, look for Illinois cheap car insurance companies if you are a resident of that state and compare the most suitable and affordable options available.
Insurance Fraud and Other Severe Cases
The problem with getting your policy canceled for insurance fraud or other severe cases, such as accidents, driving under the influence, etc., is that things get very complicated.
Getting your policy reinstated is a far-fetched thought. It would be complicated to find an auto insurance company that would sell you any policy. In such severe cases, taking the legal route is the preferred option. Contact an attorney and then proceed with it.
Reinstating your car insurance policy is simple if the reason for policy cancellation is simple. In every case, contact your insurance agent to know more about the process.
