March 23, 2011

Questions To Ask When Switching Car Insurance To Avoid A Lapse

Experiencing a lapse in coverage in one's vehicle insurance coverage is a bad deal under any circumstances, whether as a result of a policy cancellation by the insurance company or because a policyholder has elected to switch coverage providers. Certain car insurance questions should be answered in the event of any potential lapse in coverage, even for a period as short as one day. Not only is it illegal to operate one's vehicle on public roads while not insured but there is also the risk of being involved in an accident in which you are deemed liable and are left with no liability protection.

Injuring someone or being found at fault for loss of life or property damage is bad enough. Facing the consequences of such events without the protection provided by liability coverage could conceivably mean financial ruin. In addition, even a short-term lapse as a result of a policy expiring or becoming terminated through cancellation can have far-reaching effects. Since the Department of Motor Vehicles is notified through an insurance database of any policy cancellations and impending lapses, a driver allowing his or her coverage to lapse may also find their driver's license suspended.

When looking for new coverage, specific car insurance questions should be asked and answered. Chief among these is when the new coverage takes effect. It is imperative that the new policy take effect before the existing policy is terminated in order to avoid any lapse in coverage. Another question to ask is what about the grace period of the policy. This is especially important if a policy is being cancelled by the insurer for non-payment of premiums.

When switching car insurance companies, something many are doing these days in an effort to save money, it's critical to ensure the new coverage has taken effect before the existing policy is allowed to terminate. Failure to do so can affect your driving privileges, can increase the amount of premiums for future insurance coverage, can give cause to your new insurance carrier to cancel your new policy once they become aware that you had a lapse you didn't report (fraud) and can even affect your credit rating. All this can be averted by making sure your two policies overlap by at least one day.

If you do suffer a lapse in coverage, expect your future car insurance coverage to be more costly and, if your driver's license gets revoked, you will most likely face additional fees in order to have it reinstated. If the purchase of your vehicle is being financed with the requirement that insurance be kept continuously in force, expect your lender to charge you exorbitantly for their coverage.