In times when the economy is weak, like now, many people considering cutting things like insurance to save money. If you’ve considered this, the good news is that you’re not alone, but the bad news is that even if you let your car insurance lapse for less than a week, it can COST you money rather than saving it.
Why?
Aside from the obvious financial and legal risks of driving without having auto insurance, many insurance companies will require you to pay an initial surcharge of 25-50% for a new policy if you’ve let your old one lapse. In addition, your premium will be higher, as well. This is because statistics point to uninsured drivers being more likely to be involved in fatal traffic accidents. You could wind up paying as much as 25% more for your insurance than you should.
In addition, there are state-assessed penalties for failing to maintain adequate auto insurance. The details vary from state to state, but range from having your vehicle registration suspended and requiring you to send your license plates back to the Department of Motor Vehicles until you have proof of new coverage, or having your vehicle impounded, or even having to pay fines and fees that (in some cases) keep accruing every day your vehicle is without insurance.
As you can see, it’s vitally important to keep some coverage, even if you reduce it to the bare minimum required by state law, when you’re trying to live on a strict budget. If you’ve already let your coverage lapse, get it reinstated as soon as possible, and if you haven’t, consider that you may be able to raise your deductible, remove extra coverage options, ask about insurance discounts you don’t already have, and re-arrange your payment schedule in order to save money.