Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

Full Bio →

Written by

Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

Full Bio →

Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 9, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right car insurance coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Car insurance comparison shopping should be easy. We partner with top car insurance companies. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Key takeaways...

  • Failure to secure and maintain an active car insurance policy can and will result in the loss of your vehicle
  • In most states, it is illegal to own and possess a car without car insurance
  • Many drivers are unaware of all the consequences of letting their car insurance lapse

If you have ever wondered what happens if I have a lapse in car insurance, you are not alone. Unfortunately, each year millions of people who let their car insurance lapse discover what can happen the hard way.

Drivers who let their car insurance lapse often have their cars repossessed by the bank can have their license suspended by the state, can get arrested for driving with a suspended license and can be held personally liable for any damages if ever in an accident.

Don’t let your car insurance lapse, find more affordable car insurance for FREE by entering your zip code above!

Table of Contents

Lienholder Can Repossess Your Car

If you do not own your vehicle outright and are making payments to a bank or finance company, you are required to secure and maintain car insurance on your vehicle at all times.

Failure to secure and maintain an active car insurance policy can and will result in the loss of your vehicle.

Whenever a driver has a lapse in car insurance, the car insurance company has a duty to notify the lienholder of that lapse. That is because the lienholder is the official owner of the car.

Once notified, a lienholder will normally contact you to discuss the lapse in car insurance.

If the lapse in car insurance is not cleared up, the lienholder will take the steps to repossess your car. Lienholders have a vested interest in protecting any car that they own.

Whether you are making timely payments or not, if you do not maintain an active auto insurance policy on your vehicle, the lienholder will have every right to repossess the vehicle.

If you have let the car insurance lapse on your vehicle, you must take the time to secure a new car insurance policy now.

Failure to secure the proper car insurance coverage may lead to your car being repossessed by the bank.

Compare Car Insurance Companies

Compare quotes from the top car insurance companies and save

 Secured with SHA-256 Encryption

Compare quotes from the top car insurance companies and save

 Secured with SHA-256 Encryption

Your Driver’s License Can and Will Get Suspended

Another consequence of letting your car insurance lapse is your driver’s license can and will get suspended by the State.

Once you have a lapse in car insurance, your car insurance company will report the lapse to the Department of Motor Vehicles in your state.

Once reported, your license will be suspended until you clear up the car insurance lapse and bring proof of car insurance into the Department of Motor Vehicle that services your state.

In most states, it is illegal to own and possess a car without car insurance.

If your car insurance has lapsed it is important that you make plans to secure a new policy or go to the Department of Motor Vehicles to surrender the plates to your vehicle.

If you don’t, your driver’s license will be suspended and you will have to pay a fee to get your license reinstated. The fees to get your license reinstated are very costly.

Typically, you will have to pay a certain amount of money for each day of suspension, so getting your license reinstated could be very costly.

Drivers Can Get Arrested For Driving With a Suspended License

Drivers who drive with a suspended license can get arrested for driving while under suspension. If your lapse in car insurance is reported to the state and your license is suspended, you may not operate a vehicle in your state.

If you choose to operate a vehicle and are stopped by the police, you may be arrested for driving with a suspended license.

Many drivers are unaware of all the consequences of letting their car insurance lapse.

To avoid getting arrested for driving with a suspended license, take the time to generate quotes from multiple insurance companies online now.

If your car insurance has lapsed, don’t let another day pass. Getting multiple automobile insurance quotes for FREE is easy, just enter your ZIP code in our car insurance comparison tool.

Driver’s Can be Held Personally Liable For Damages

Although some states have uninsured motorist coverage, if you operate your vehicle and are in an accident you may be held personally liable for any and all damages.

One of the main reasons why drivers must always have an active car insurance policy is to protect their investment and make sure they are covered if they are in a car accident.

If your car insurance has lapsed and your vehicle is involved in an accident, the owner of the vehicle can be held personally liable for any damages.

In addition to being liable for damages sustained by others, drivers who let their auto insurance lapse will also be liable to the bank for any damages to the car itself.

That is why it is important to maintain an active car insurance policy on your vehicle at all times. Failure to keep an active policy can result in the loss of a large sum of money.

If you have let the insurance on your vehicle lapse for any length of time, it is important that you take action right now and secure the proper coverage for your vehicle today.

To generate multiple car insurance quotes from several different car insurance companies for FREE enter your zip code now!

References:

  1. https://www.esurance.com/info/car/myth-a-lapse-in-coverage-wont-affect-your-rate
  2. https://midatlantic.aaa.com/insurance/car
  3. http://www.mva.maryland.gov/drivers/apply/new-to-maryland.htm
  4. https://www.thebalance.com/how-can-i-find-out-if-my-drivers-license-is-suspended-527261