This is a common question in the auto insurance industry. We often see customers who have neglected to purchase at least the minimum amount of insurance required by law, and once they finally try to buy a policy they’re surprised by the amount of their premiums. It can be confusing for a driver with a good driving record to learn that a lapse in coverage causes higher premiums. However, there is actually a reason insurance companies calculate premiums in this way.
As most people already know, auto insurance rates are calculated based on risk. A driver who is judged as being a higher risk is more likely to file a claim, costing the insurance company money. Allowing your auto insurance to lapse is seen as risky behavior by insurance companies. This is because a driver without insurance is subject to enormous court fees, medical bills, and yet taking it anyway, translates into the driver engaging in high risk behavior. In the minds of insurance companies, engaging in one risky behavior means a driver might engage in other risky behaviors. Therefore, these individuals are considered high-risk drivers.
This situation can be frustrating to drivers who want to comply with the law and then face higher premiums than they expected. The best course of action is to be sure all other possible discounts are being counted, such as discounts for completing a driver safety course, enrolling in paperless billing, or combining auto insurance with other types of insurance policies. This ensures the lowest rate possible.
Next, the driver should be diligent in making premium payments on time, and has purchased continuous coverage without any gaps for a year or so, he or she will begin to see those rates decrease.
If you’ve let your auto insurance lapse, schedule an appointment with us to go over your options. We can help you find the lowest possible insurance premium, and make sure you receive any discounts for which you qualify.