The Effects of an Auto Insurance Lapse In Coverage |
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Oh No, A Lapse!
Forgetting a bill here or there has happened for many. However, it is especially important to set your auto insurance payments with automatic payments from your checking account; and here’s why. Not only will your payment be made automatically, most insurance companies will offer a discount for paying your premium this way. They reward you for relieving them of the responsibility of sending, receiving and processing your payments each and every month.
So let’s say you had a tough month and you accidentally bounced from your automatic payment. So the bank charges you a $35 plus or minus overdraft fee. Ouch. This is much better than finding out about a lapse in your coverage after crashing into some Lady’s Benz.
How Does a Lapse Affect My Rate?
Well, the answer to this question is “enough”. You’ll find a large enough difference between a quote with prior compared to a quote without prior. Depending how long ago your insurance coverage lapsed is also going to matter. If you haven’t had coverage for a couple weeks or even a month, several companies out there will not insure you. You may be limited to the number of companies you’ll be able to receive quotes from. If you recently lapsed by mistake call your Insurance company, explain your story and do what you can to get your policy reinstated. A mid-term lapse is much easier to work with compared to insuring a Driver with no prior coverage. One question every Agent will ask during the quoting process is, “How long have you had continuous coverage and with Whom”.
Avoiding Lapse with Credit (Careful with this Option)
I don’t think too much of credit cards. I’ve never been a fan of credit cards. When I was 18 I had one credit card and it can only be used for Big O Tire purchases in the unfortunate case I get a flat someday and had no money for the repair. I do believe one other great reason to have a credit card is to pay for insurance. With the use of a credit card you will reduce your risk of lapsing your coverage. With buying your insurance “in full” for the term of the policy guess what, you also get that wonderful paid in full discount. This can bring a $1000 total premium down to $800. Not too shabby. This may also be a great way to build up your score. Just don’t max out your card or anything, play it smart. I’ve always been told never to charge over half of my credit limit and always make double payments. If your using it for paying insurance premium you’ll need to determine the amount you’ll need to pay on your card monthly so there will be no balance left over at the end of your policy term.
Like I just mentioned, play it smart, be careful and you’ll come out ahead.