One of the bigger costs of car ownership is car insurance. For most U.S. drivers, this type of insurance is a legal requirement, in addition to the financial protection it provides.
However, a percentage of American drivers are letting their car insurance policies lapse. According to a March 2023 TransUnion study, about 15% of American drivers said they owned or used a car without valid insurance or let their current coverage lapse between October 2022 and March 2023.
Not having auto insurance leaves you vulnerable to a myriad of financial and legal hardships if you're involved in an accident, from legal fees to license suspensions. In addition, most auto loan lenders require car insurance coverage.
On top of those bigger risks, allowing your car insurance policy to lapse can also make any future auto insurance more expensive. Here's why you shouldn't make this expensive mistake, and how to save if your renewal rate is higher than you'd like.
Car insurance can get more expensive after a policy has lapsed
Letting your car insurance lapse can make getting coverage more expensive in the long run. Even going a day or two without car insurance could be considered a lapse by insurance companies, who will then flag you as a risk and charge you higher premiums.
According to data from Bankate, the average minimum coverage policy costs $545 per year before a lapse, and $602 after a lapse in coverage. For full coverage car insurance, the average pre-lapse premium is about $1,771, and $1,949 after a lapse. That's an increase of about 10% for both types of coverage.
To avoid a lapse, shop for car insurance before your current policy expires. Comparing several quotes can help you make sure you're getting the best possible deal on your coverage. Our top picks for auto insurance include Geico for low average premiums and relatively high customer satisfaction scores and State Farm for affordable full-coverage premiums.
Geico Auto Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
Geico coverage and services are available in all 50 states and the District of Columbia and there are 16 different types of discounts available. In addition to the standard coverage options, Geico offers various optional add-ons, such as emergency roadside assistance, rental car reimbursement and mechanical breakdown insurance.
Terms apply.
Read our Geico Auto Insurance review.
State Farm Auto Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
State farm is one of the largest auto insurers based on market share and has an excellent reputation for customer satisfaction. It offers 13 discounts, including ones for safe driving and young drivers.
Terms apply.
Read our State Farm Auto Insurance review.
How to make your car insurance more affordable
If your insurance provider charges you higher-than-expected premiums on your renewed policy, you aren't helpless. Here are several ways to make your car insurance cheaper when it comes time to renew your policy:
- Consider a higher deductible. An insurance policy's deductible is the amount you pay before the insurance company kicks in to cover the rest. Generally, the higher the deductible, the lower the premium, or the cost for coverage.
- Be sure you're not paying for more than you need. There are several add-ons you might see on your car insurance policy that you possibly could do without, like roadside assistance or rental car reimbursement. Skipping these additional expenses could bring down the cost of your coverage.
- Drop comprehensive and collision coverage for older cars. If you have an older car, you may not need comprehensive or collision coverage. The Insurance Information Institute recommends skipping these coverages for cars worth less than 10 times the premium.
- Take advantage of discounts. Consider looking for an insurance company that offers discounts for safe driving, antitheft devices or low mileage — Farmers Insurance, for example, offers a total of 22 discounts. Also, consider bundling your homeowners or renters insurance for a discount. We picked Nationwide as one of our top picks for home and auto bundles for its discount of up to 20% for purchasing both policies.
Farmers Auto Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
Farmers sells car insurance in every state except Alaska, Delaware, Hawaii, Maine, New Hampshire, Rhode Island, Vermont, Washington, D.C., and West Virginia and offers a whopping 22 discounts.
Terms apply.
Nationwide Auto Insurance
Cost
The best way to estimate your costs is to request a quote
App available
Yes
Policy highlights
Nationwide offers near-nationwide availability and personalized services, such as On Your Side® Review, a free annual insurance evaluation to ensure you are adequately protected and are taking advantage of any discounts available to you.
Terms apply.
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Bottom line
Letting your car insurance lapse can lead to dire legal and financial consequences. Even a short lapse can raise the price you'll pay for insurance in the future. For a more affordable rate, consider comparison shopping, taking advantage of discounts and cutting out coverage add-ons you don't need.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every car insurance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of car insurance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best car insurance.
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