Lapse

What is a lapse? The insurance answer for lapse is defined as a failure to continue an insurance policy.

The insurance coverage stops at expiration date. This could be the choice of the you, the insured or the insurance company known as the insurer.

If the insurance company decides to lapse your policy then they have a responsibility to notify you at the last known address you have provided. If the situation is that your renewal was sent out to you and it has not been paid then the insurer will usually give some time to get this done and will reinstate the coverage once payment is received.

If your policy is being lapsed for some other reason and renewal is not being offered to you then you have to be notified in advance. If you deal with an agent or broker then it is their duty to notify you of this change and offer other coverage so that you are not without options. If you deal directly with the insurance company then they will let you know directly that there is a problem.

If you have breaks in your coverage then you can end up paying more for insurance premiums because you have lost claims-free discounts or it affects your history.