Quick background… I live in Texas and have a financed car. I lost my job in September and managed bills with my severance, but I fell behind on my insurance payments with USAA. I’ve just started a new job and waiting on my first paycheck, but USAA says they’ll cancel my policy next week. If they cancel it, I’ll owe the overdue amount plus some extra fees. I’m thinking about canceling the policy myself and getting a new one once I’m paid. What might happen if I go without insurance for a few days?
Even if you’re not driving, just owning the car without insurance creates a ‘lapse,’ and a lot of states (not sure if Texas does) can demand you return your registration or charge fines. Plus, without continuous insurance, any new company might charge a lot more if they find out about the gap.
Everyone’s already brought up the lapse, but just to be clear, if you cancel with USAA, it doesn’t mean you avoid paying the overdue fees. You’ll still owe that balance.
Sam said:
Everyone’s already brought up the lapse, but just to be clear, if you cancel with USAA, it doesn’t mean you avoid paying the overdue fees. You’ll still owe that balance.
Yeah, I figured I’d owe the balance… I just hoped to dodge the extra fees.
@Dakota
Would it help to start a bare minimum policy somewhere else? That might get you some coverage without a big upfront cost. Gaps in coverage can lead to fines, higher rates, even state penalties like registration holds or license suspensions.
Besides higher rates, some insurance companies might even refuse to cover you if you’ve had a lapse.
Would paying with a credit card work for you? You could at least cover a month or so.
Even a short lapse usually raises your premiums. Plus, if you financed the car, you probably agreed to keep insurance on it. If you don’t, the finance company might get insurance to cover their own interests, which is usually expensive. You could maybe borrow a bit from friends or family or pick up some side work for a quick fix. That way, you’re not stuck with no coverage if something happens to the car in the meantime.
@Pat
How bad could it be if I’m just without it for two days?
Dakota said:
@Pat
How bad could it be if I’m just without it for two days?
They don’t really care how long the gap is. Even a short lapse counts against you.
Dakota said:
@Pat
How bad could it be if I’m just without it for two days?
I’ve seen rates go way up even with a single day lapse.
Dakota said:
@Pat
How bad could it be if I’m just without it for two days?
I’ve seen rates go way up even with a single day lapse.
Same… it’s pretty common.
Dakota said:
@Pat
How bad could it be if I’m just without it for two days?
Doesn’t matter if it’s 2 days or a month. A lapse is a lapse. Maybe try borrowing from family or picking up some side work?
If you get a new policy within 31 days, you can avoid an official lapse. Just get a very basic plan to keep coverage, even if it’s not what the bank would prefer.
Going without coverage on a financed car could hit you in three ways:
- You’ll still owe USAA for the balance and any fees.
- Your lien holder might add force-placed insurance, which is usually costly and only covers their interest.
- Any future insurance will probably be way more expensive if they see a lapse.