What Is Lapsed Insurance?

Sometimes the owner of an automobile policy moves shortly before the insurance company issues its bill for a premium. In that case, the payment could get delayed a few weeks. Still, insurance companies do their best to keep a policy holder from learning that he or she is driving around with lapsed insurance.

Definition of lapsed insurance

That is what a policy holder has if he or she has not kept up with payments for a policy’s premium. Most insurance companies arrange for an extension of the date when the premium comes due. Consequently, the policy holder remains covered, in the event of an accident.

Lapsed coverage equates with no coverage

Possible consequences for lapsed/no coverage:

• Loss/suspension of license (assuming no involvement in an accident)
• Suspension of registration
• Tickets and fines
• Repossession of vehicle

Accident Lawyer Coquitlam knows that in the event of an accident, the person with the lapsed insurance could get held responsible for any injuries.

An additional risk invited by driving around with lapsed insurance

Someone that has chosen to drive around with lapsed insurance has agreed to take-on an added amount of risk. Insurance companies do not want to encourage their customers to join the list of at-risk drivers. For that reason, those companies act to limit the number of policy holders that turn into holders of lapsed insurance.

How do insurance companies discourage the practice of repeatedly missing the required payment on a premium? They do that by raising the rate, if a driver has made a habit of driving around with lapsed insurance. At the same time, each insurer shares with other insurance companies the names of any drivers that have chosen to try that risky way of traveling on the road.

In other words, the names of the motorists that have felt motivated to become higher risk drivers gets passed around among the community of agencies that sell automobile insurance. Consequently, each such agency can easily identify an at-risk driver, if he or she seeks to purchase a policy from a new company.

In that driver’s mind, it might seem simple to run away from a higher premium. That mind has pushed the risk-obsessed motorist to change insurers. Yet that attempt to obtain coverage from a different insurance company does not yield the expected result.

The motorist and potential customer hoped to obtain reasonably-priced coverage. To that same customer’s surprise, the premium quoted by the second insurance agency is just as high as the one issued to higher-risk drivers at the former agency.

That approach forces the risk-obsessed motorist to deal with an additional punishment. That punishment comes in the form of quotes, quotes that warn about the existence of a high cost premium, from any insurance agency.