February 15, 2011

What To Do If Your Auto Insurance Policy Lapses Due To Non Payment

Nowadays, it can be difficult to keep up on one's insurance payments. The economy worldwide has set in motion an inability for many individuals to keep up on their recurring monthly bills. One's auto insurance policy is no different. A lapsed insurance policy can sometimes spell trouble for the individual, especially if he or she continues driving without the policy and is involved in an accident. The following information will explain what one should do in the event that his or her auto insurance policy lapses due to non-payment.

Several auto insurance companies have changed the guidelines that apply to reinstating lapsed policies. A lapsed insurance policy normally occurs if the policy is set on monthly payments and the individual fails to make a scheduled payment within the grace period allowed. This lapse in coverage will mean that the individual is no longer covered; but, many companies are finding that it is less time consuming to simply reinstate a policy upon payment of the premium rather than creating an entirely new policy.

When it comes to auto insurance, there are several ways that an individual can have his or her policy reinstated. Some companies allow a reinstatement directly after payment of the late premium. In order to reduce instances of fraud, many companies will reinstate one's policy after a lapse, but it will not become effective until the day after the payment has posted. This means that the insured driver cannot be involved in an accident and expect the company to pay for it.

Some companies, however, do offer policy reinstatements that provide for no lapse in his or her coverage. This reinstates the individual's coverage back to the date that it originally had lapsed. The insured will normally have to sign a statement stating that he or she has not suffered any losses during the time of the lapse. Because this is a bonus for the driver, many companies that offer this type of service require that the payment for reinstatement be made within a certain amount of time; otherwise, he or she will need to apply for a brand new policy.

When a driver is able to utilize the reinstatement with no lapse feature, he or she must pay the full amount to cover the lapsed period and any period preceding it. In other words, in order to continue service, he or she must pay for the time that he or she was unable to use the service because of the lapse. Depending upon one's circumstances, sometimes it is simpler to just start over and get a new insurance policy if the individual's policy has lapsed.