Here's What Happens When You Let Your Auto Insurance Lapse

It could happen to anyone. Life happened, and you didn't stay on top of your auto insurance policy. Now it's lapsed, and you don't have car insurance.

All drivers need auto insurance, regardless of where they live. (Yes, the state of New Hampshire doesn't legally mandate auto insurance, but it does require drivers to demonstrate their ability to pay for a car accident that they are found to be at fault for, so it's a much smarter move to just get an insurance policy even if it's not legally required.)

In most states, if you are pulled over by the police or get into an accident and are found not to be insured, there will be consequences. If this happens to you, here's what you can expect.

You could face legal consequences

Since driving without insurance is illegal in most states, you can expect legal consequences if you let your insurance lapse. These will depend on where you live. In New York State, for example, you could be arrested or ticketed, your car could be impounded, your registration could be revoked, and you may even lose your driver's license.

This is going to mean a lot of paperwork to go through, and a lot of fees to pay. And if you find yourself without a vehicle because it was impounded, or unable to drive because you are without your driver's license, other aspects of your personal finances will likely be impacted. How are you going to get to work if you normally drive there?

You'll have to pay out of pocket for any damage you cause

In an even worse scenario, if you get into an accident or have another vehicle-related mishap, the consequences will be even more severe. Again, what you'll face will depend on your state. In New York, you'll lose your license and vehicle registration for at least a year, and could face a fine of $1,500. It stands to reason that if it's not a first offense, you'll get in worse trouble.

And if you get in a wreck without insurance and you're found to be at fault for it, all the financial burden could fall to you. Think about how much vehicle repairs and medical bills could cost, and it might just be enough to remind you to keep up with your auto insurance premiums.

Your rate is likely to go up

When you do try to get your insurance policy reinstated, or purchase a new one, you will likely find that rates are more expensive. This will depend on how long your policy has been lapsed; per Value Penguin, you could be looking at just an 8% increase if it's been fewer than 30 days, but a jump of 35% if it's been longer.

It's best to contact your current insurer as soon as you realize the policy has lapsed (although, the insurer will likely reach out to you if you can be reached; more on that below). This way, you can see what you need to do to get back on track. If you need to get a new policy, take the time to shop around with other insurers for the best rate.

Don't let this happen to you!

It's a really good idea to stay on top of your auto insurance and make sure you don't let your coverage lapse. You can avoid problems by making these moves:

• Keep your contact information current: If you move, you should be reaching out to your insurer about address and other contact info changes.
• Mind the gap: Between cars and policies, that is. If you get a new vehicle after a period of not owning one, canceling your old policy could count as a lapse, according to U.S. News & World Report. And if you change insurers, make sure your coverage dates ensure you're not left uninsured.
• Sign up for autopay: Autopay makes me nervous (too many years of living paycheck to paycheck), but having my auto insurance on it means I have one fewer bill to remember to pay.

A lapsed auto insurance policy can have expensive consequences, so it's best to keep it from happening in the first place. And if it does happen to you, now you'll know what to watch out for and how to right the situation as quickly as possible.