Some people think that obtaining car insurance after not having a policy for a time is no different from changing providers. In fact, a lapse of coverage for any reason will have some impact on how insurance providers evaluate the application for coverage. Here are some things you need to know about lapses and what they mean for you in the future.
Reasons Why People Allow the Coverage to Lapse
Sometimes the lapse in coverage is due to some type of lifestyle change. For example, the individual may be without a vehicle for a year or so and not need car insurance. When a car is purchased after a couple of years, most insurance providers don’t treat the situation as if the applicant is seeking coverage for the first time. The past history is taken into consideration and the lapse does impact the rates that the individual can command.
Why Does the Lapse Lead to Higher Premiums?
The reason that car insurance providers require higher premiums after a lapse in coverage is because the applicants are perceived to constitute a higher risk than individuals who maintain coverage on a regular basis. In a sense, the applicant is having to start over in terms of establishing a reputation that indicates responsible driving habits.
This is true even if the individual has only been without coverage for a year and the driving record for the last five years is spotless. For at least the first year of the insurance term, expect to pay higher premiums.
Will It Be Like This From Now On?
The good news is that you don’t necessarily have to deal with higher premiums for the rest of your life. Once you get past that first year, you may find that your current provider is willing to take a second look. If you have not had a claim during that time and your driving record remains spotless, there is the potential that the provider will be willing to extend more competitive terms.
Alternatively, you might be able to approach another auto insurance provider and explain that you’ve had continuous coverage after a period of not having insurance. An agent with that competing company will determine if it is possible to offer more competitive terms and still provide at least the same level of benefits.
If you have not had car insurance coverage for awhile, rest assured you can still obtain a policy. Expect to pay a little more for now, but know that the day will come when you can once again obtain more competitive pricing.