How to Renew Lapsed Auto Insurance

Going even one day without auto insurance coverage can lead to higher rates. After 30 days, you’re deemed to have “no prior insurance,” which can sometimes cause rates to skyrocket to twice as much as you paid before.

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Don’t accept higher rates lying down, says Jim Fults, vice-president of product management for Fireman’s Fund Insurance Co. Many states have laws to protect certain groups against rate increases if they have a lapse in coverage -- for example, if you’re in the military and stationed overseas, or you have been in the hospital for an extended period.

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Whether you fall into such a protected group or simply gave up driving while living in the big city or abroad, your best bet is to shop for a policy through an independent insurance agent. Internet quote services, such as InsWeb.com, don’t give you a place to explain a lapse, so they pull computer-generated rates that just note that you had one. You can find an independent agent.

If you get stuck paying higher rates, it should be for six months, tops. After that, carriers should give you credit for previous insurance -- and the discounts that go with it -- so shop around again when it’s time to renew.

This article first appeared in Kiplinger's Personal Finance magazine. For more help with your personal finances and investments, please subscribe to the magazine. It might be the best investment you ever make.

Anderson has been with Kiplinger since January 2004, when she joined the staff as a reporter. Since then, she's covered the gamut of personal finance issues—from mortgages and credit to spending wisely—and she heads up Kiplinger's annual automotive rankings. She holds a BA in journalism and mass communication from the University of North Carolina at Chapel Hill. She was the 2012 president of the Washington Automotive Press Association and serves on its board of directors. In 2014, she was selected for the North American Car and Truck Of the Year jury. The awards, presented at the Detroit Auto Show, have come to be regarded as the most prestigious of their kind in the U.S. because they involve no commercial tie-ins. The jury is composed of nationally recognized journalists from across the U.S. and Canada, who are selected on the basis of audience reach, experience, expertise, product knowledge, and reputation in the automotive community.