Lapsed Car Insurance - What Happens If Your Car Insurance Lapses?
We will get straight to the point – a lapsed car insurance, whether intentional or unintentional, is never a good idea. This blog post will talk you through the dangers associated with a lapsed insurance. Before doing that, let us discuss what we mean by lapsed insurance. The term refers to when your insurance expires and you no longer have protection. In countries where car insurance is mandatory, lapsing the policy can land you black points, fines, and the authorities can impound your vehicle.
Causes of Lapsed Insurance
The insurance can lapse for several reasons. Let us go through them.
Not Paying the Premium
After buying car insurance in UAE or anywhere in the world, you are expected to pay the premium. We all know about it. The premium is like a fee for using a particular service. If you renege on paying the premium, the insurance company will cancel the insurance. Hence, your insurance will lapse.
Too Many Accidents
If you are involved in an accident, it means that the insurance provider must pay for the coverage included in your policy. Too many accidents mean that the provider is paying out more money than it is earning. What does it mean? It is like a bad investment on the part of the insurance company. Thus, they will act swiftly and cancel/lapse your policy.
Intentional
Suppose that your policy is about to expire on 31st March 2021. The insurance company has sent you reminders regarding the renewal, but instead of renewing it, you let it lapse. The best insurance companies usually wait a month longer before the policy is considered lapsed.
Consequences of a Lapsed Policy
There are several consequences when your policy lapses. PitStopArabia will elaborate on them one by one.
Financial
Imagine that you are driving around without car insurance, and you end up in an accident. You can pretty well imagine what the financial costs are going to be for the car repair and covering the damages to the other party.
Legal
Car insurance is mandatory in the UAE and numerous other countries worldwide. Hence, if you drive without insurance in countries where it is compulsory, you are breaking the law. People who violate the law are punished accordingly. In the UAE, you will get black points on your license and a fine. That’s not all. Your vehicle might be impounded too. In other countries, driving without insurance can lead to brief jail time.
Premium Increases
When buying car insurance, the companies look up your previous record to determine the premium. It means that if they find out that you have been driving without insurance, they will increase your premium. Why wouldn’t they? No one likes a risky investment. In several countries, there are insurance companies that specialize in high-risk drivers. But they charge a much higher premium than others.
How to Avoid a Lapsed Insurance
Considering the consequences, the best thing to do is avoid letting your insurance lapse. Here’s how to do it.
Responsibility
You must show responsibility and renew the policy well before its expiry date. Waiting till the last moment is never a good idea. Other than that, drive safely.
Communication
If you are behind on your payments, don’t hesitate to talk to your insurance company. Falling back on your insurance payments is quite common. The insurance provider will take your situation into account and present you with a payment plan. Make sure to stick to it.
Wrap Up
This wraps up our article. Remember, the policy lapses primarily due to non-payment and a bad driving record. These are things that are in your control. Therefore, drive safe and pay on time. Thank You.