Think twice before letting your auto insurance policy lapse.

In Texas and several other states it is against the law to drive without insurance. In addition to being illegal, letting your policy lapse would leave you at risk should an incident occur and personally liable for any damages you may be responsible for.

If your car is financed, then your lien holder has the right to force place coverage on your car and increase your monthly car payment. The lender placed coverage is often more expensive than auto insurance you would obtain on your own and does not provide liability protection.

Lastly, letting your auto insurance lapse could mean that your rate will be much higher when you decide to reinstate, even if you don’t own a car. Having a lapse in coverage, especially one lasting more than 30 days could raise your rate significantly.

Avoid having a policy lapse by always paying your car insurance on time. Nearly all insurance providers now offer auto draft, if you’re forgetful set your policy up on auto withdrawal or monthly bill pay. In cases where your financial position has changed ask your agent to shop your insurance with other carriers. He or she should be able to give you advice on lowering your rates.

While letting your insurance policy lapse may save you some money right now it could cost you a lot more in the long run. Higher premiums, financial consequences should you have an accident or receive a ticket for driving with out insurance, and increase your car payment if your lender force places coverage.

Originally written July 21,2011