Many auto insurance companies are of the belief that history repeats itself. This is why it's important for you to make an effort to maintain a record of consistent car insurance coverage. When pricing their auto insurance policies, insurers attempt to determine how long they believe the insured will maintain a policy. All else equal, the longer they believe you will be a policyholder, the less they will charge for a given policy. If your record demonstrates a span where you went without car insurance coverage, some carriers will charge you as much as 20% more, or not offer you coverage at all.
Some tips to avoid this situation:
Pay your bill on time.
If you miss a payment on your policy, your policy can be terminated automatically. In this case, your record will now include a lapse in coverage. Be sure to pay bills within 15 days after your payment due date.
Maintain your policy even if you do not plan to drive, or will temporarily be without a vehicle to drive.
If you plan on not driving for an extended period of time, then it may make sense to cease coverage. But, even if you do not plan on driving for six months to a year, you may want to consider maintaining some basic coverage. Car insurance carriers may penalize you if you have not been consistently insured for up to the prior 3 years. It is important to weigh the short-term costs against the long-term cost increases in coverage.
If switching carriers, set the new policy effective date at or prior to existing policy expiration or cancel date.
When you switch car insurance carriers it is important to make sure you do not go a single day without coverage. In order to ensure this, make sure to check your current policy’s expiration date, and set the new policy to be effective at or before that date. Similarly, if you are looking to cancel your current policy to switch to a new auto insurance carrier, be sure to set the new policy effective date at or prior to the old policy’s official date of cancellation.
As always, CoverHound is focused on helping you make the right decisions with respect to your car insurance. If you do happen to find yourself in a situation with a lapse in coverage, you can rest assured we will find you a suitable carrier who can service your policy at a reasonable cost.