Can I Reinstate My Insurance After an Accident?

Having car insurance is crucial to protect yourself financially in the event of an accident. But what if your coverage lapses and you have an accident during that time? Is it possible to reinstate your insurance and have the accident covered?

The short answer is maybe, but it’s not guaranteed. Here’s an in-depth look at what to do if you have an accident with lapsed coverage and how you may be able to get your insurance reinstated.

Consequences of Driving Uninsured

Before exploring reinstatement, it’s important to understand the consequences of driving without insurance. These include:

• Fines – Most states require drivers to maintain continuous auto insurance coverage and driving uninsured can lead to fines commonly between $500 – $1000 for a first offense. Subsequent offenses often carry steeper fines.

• License/Registration Suspension – Law enforcement will suspend your driver’s license and vehicle registration if caught driving uninsured. Most states require you to file an SR-22 form and maintain insurance for 3 years before reinstating your license.

• No Recourse After an Accident – If you cause an accident while uninsured, you could be sued personally by the other driver and are not entitled to any insurance compensation for your own vehicle damages or injuries.

• Higher Insurance Rates – Lapsing your insurance, even if just for a day, is grounds for your insurer to increase your rates at renewal due to you now being seen as a higher risk. Expect rate hikes around 20-60% higher.

Clearly, maintaining continuous auto insurance is critical to avoid legal hassles and expenses. But accidents happen, so next we’ll explore your options if you have a mishap during a coverage gap.

What to Do After an Accident with Lapsed Insurance

If you find yourself in an accident while uninsured, here are key steps to take:

• Exchange information – Be sure to collect the other driver’s name, contact details, insurance company and policy number, and vehicle information. Also provide them your ID.

• Document the scene – Take photos of damage, skid marks, and the accident location. Get witness names and numbers too if available.

• File a police report – Alert law enforcement about the accident and obtain a copy of the police report later. This creates an official record.

• Don’t admit fault – Even if you believe you caused the accident, don’t admit fault or accept blame verbally or in writing. Let insurance companies determine liability later.

• Contact previous insurer – Call your prior insurer that lapsed and discuss reinstatement options. Move quickly, as some have grace periods.

• Review options – If reinstatement isn’t possible with the prior insurer, you may need to shop for a new high-risk policy.

Taking these steps gives you the information needed to potentially have the accident covered. Next we’ll look at how reinstatement works.

Reinstating a Lapsed Policy After an Accident

Many insurers provide policyholders a grace period between 30-90 days to renew a lapsed policy without applying as a new customer. However, coverage still ends at 12:01 am on the first day past your expiration date.

Here’s how reinstatement works in common scenarios:

Accident Within Grace Period

• Duration – Most insurers allow reinstatement if the lapse is less than 30 days. Some extend this to 60 or 90 days.

• Coverage – Policies reinstated within the grace period pick back up as if there was no lapse. Your accident would be covered, subject to your policy limits and deductible.

• Conditions – You must pay any overdue premiums to reinstate. There is often a policy reinstatement fee around $50 as well.

• Surcharges – Expect a premium increase at renewal for the lapse, commonly 20-60% higher for 1-2 years.

So if your accident occurred a few days after lapsing, reinstatement should get you coverage. But the further from your expiration date, the less likely this is.

Accident Beyond Grace Period

• New policy – If your lapse exceeds the grace period, insurers consider you a new customer. Your old policy cannot be reinstated.

• No coverage – Getting a new policy will not backdate the start date to cover your earlier uninsured accident. You cannot add collision/comprehensive coverage for a known loss.

• High risk insurer – With an at-fault uninsured accident on record, you’ll need to secure a new policy through a nonstandard high-risk insurer. Rates will be very expensive for several years.

• No reimbursement – Some insurers may reimburse claims as a courtesy if just days lapsed, but they are not obligated to. Don’t expect reimbursement if your lapse was weeks or months.

The takeaway is that the longer your policy has been expired, the less likely your insurer can or will reactivate coverage to include your accident. At some point you’ll have to pursue a new policy.

When the Accident is Not Your Fault

If another driver caused your accident while you were uninsured, handling the claim works a bit differently:

• File with their insurer – The at-fault driver’s liability coverage should pay for your vehicle repairs and medical bills. Contact their insurer to begin a third-party claim.

• Uninsured motorist coverage – If the at-fault driver lacks sufficient insurance or flees the scene, use your own uninsured motorist coverage once you obtain a new policy.

• Limited right to sue – Some states limit your ability to sue the at-fault driver for damages like pain and suffering if you were uninsured at the time. You often must pay for repairs/bills first.

• No coverage for your vehicle – Since your policy lapsed, you cannot make a claim for damage to your own vehicle or use your medical payments coverage.

The key takeaway is that the other driver’s liability insurance should cover your losses, but not damages to your own vehicle since you were uninsured at the time.

Avoiding Lapses in the Future

While reinstatement is possible in some cases, it’s best to avoid a lapse in coverage altogether. Here are tips to stay continuously insured:

• Pay in full – Opt to pay policy periods in full rather than in installments to avoid missed payments leading to cancellation.

• Autopay discounts – Most insurers provide discounts for setting up automatic monthly payments from a bank account or credit card. This prevents missed payments.

• Calendar reminders – Mark your insurance expiration date on your calendar with an alert 1-2 months ahead as a reminder to renew on time.

• Shop rates annually – Compare quotes from insurers once a year to find potential savings so payments are affordable.

• Maintain contact info – Keep your insurer up to date with current phone numbers and address so you receive renewal notices and late payment alerts.

Other Options to Explore

If you cannot reinstate your lapsed policy and are considered a new high-risk customer, here are two other options that may help:

• State insurance pools – Most states offer an auto insurance plan or shared risk pool, known as the insurer of last resort. Rates are still high but it provides coverage options for high-risk drivers unable to find insurer on the private market.

• Non-owner SR-22 policies – These liability-only policies provide the state-required minimum coverage. They allow high-risk drivers to obtain an SR-22 to reinstate their license after a lapse. Rates are also usually more affordable than standard policies until your record improves.

The Bottom Line

Driving without insurance is extremely risky if you get in an accident. Reinstating a recently lapsed policy is your best bet for coverage, but not guaranteed, especially if the lapse was extensive. Preventing a coverage gap in the first place is ideal, but high-risk insurance options do exist if you find yourself with a lapse and accident. The sooner you consult your prior insurer or shop for quotes after an uninsured accident, the better. Maintaining continuous coverage remains key to avoiding legal headaches, fines, license suspension, and high insurance rates.