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December 29, 2010

Letting your Auto Insurance Lapse? It’ll Cost You!

Blkcar Helpful information from InsWeb.com

If you’re a woman on a tight budget, auto insurance probably puts a significant dent in your pocketbook. It would be cheaper to cancel auto insurance for a few months while you pay off credit cards and other bills, right?

Wrong.

With the recession hitting Americans hard, more consumers are choosing to eliminate insurance policies. But many drivers don’t realize that lapsed insurance policies make it more difficult—and expensive—to secure coverage in the future.

According to Timothy Gaspar, an insurance agent with FMS Financial Partners in Encino, Calif., a lapse in coverage will always have a negative impact for the consumer, especially when dealing with auto insurance.

“Many auto insurance companies give consumers a discount for what they call ‘persistency,’ which is a discount for the amount of time you have had continuous insurance,” Gaspar explains. “If you let this coverage lapse, the persistency credit will disappear, causing an increase in your rate.”

Don’t forget that auto insurance is required by law in 48 states, and the penalty for driving uninsured is steep. Offenders may face driver’s license suspension, vehicle seizure, misdemeanor charges and a multitude of fees. Additionally, uninsured drivers may be considered ‘high-risk’ by insurance companies and charged hundreds more per year—or rejected outright—the next time they apply for a policy.

But the financial headache doesn’t end there. Depending on the type of coverage, a lapsed policy could end up as a negative mark on your credit score, and the insurance company that carried your policy may be reluctant to insure you again.

So here’s the bottom line, ladies: If you’re having difficulty paying your auto insurance, it’s better to look for money-saving tips than to cancel the policy altogether. If you need help saving money on auto insurance, InsWeb.com's free, no-obligation car insurance quote form can help you shop and compare several low-cost auto insurance quotes in minutes.

 


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