Car Insurance Rates Jump for Drivers with Lapsed Coverage, Insurance.com Analysis Finds

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Car insurance rates jump an average of 5.7 percent for drivers who let their policy lapse, according to an Insurance.com analysis of 184,000 policies sold in 2009 and 2010. Following a few simple tips can keep drivers from needlessly paying more for their auto insurance coverage.

Dropping auto insurance to save a few bucks in the short run can be very costly over the long run.

In tough economic times, drivers may be tempted to briefly skip paying for car insurance. But Insurance.com has found that pausing coverage can be a costly decision over the long haul because car insurance rates jump for drivers with a policy lapse.

Drivers who let their most recent auto insurance coverage lapse before purchasing a new policy paid an average of 5.7 percent more for annual coverage than drivers who maintained continuous coverage, according to an examination of 184,000 car insurance policies sold through Insurance.com in 2009 and 2010:

  •     All drivers in study who had no policy lapse: $1,405
  •     All drivers in study who had a policy lapse: $1,485

Drivers insuring a single vehicle whose previous policy had lapsed paid 8.8 percent more in average annual premium costs than drivers who maintained continuous coverage for one vehicle:

  •     Drivers with one vehicle and no policy lapse: $1,222
  •     Drivers with one vehicle who had a policy lapse: $1,329

Insurers begin charging higher rates with policies that lapse by as little as one day, according to the Insurance.com data. The penalty is even greater when insuring multiple cars.

Drivers insuring two or more vehicles whose previous policy had lapsed paid 12 percent more in average annual premium costs than drivers who maintained continuous coverage for two or more vehicles:

  •     Drivers with two vehicles and no policy lapse: $1,781
  •     Drivers with two vehicles who had a policy lapse: $1,994

"Dropping auto insurance to save a few bucks in the short run can be very costly over the long run," says Chris Kissell, managing editor of Insurance.com. "It's the very essence of 'penny wise, pound foolish.'"

There are several reasons insurers raise rates for drivers who have a lapse in coverage. One of which is based on car insurance company research, showing that drivers with a history of letting their policies lapse are more likely to get into accidents.

Each insurance company has its own formula for determining how high rates go after a policy lapses and how long the penalty will remain in place.

Methodology
The average annual premium was calculated by examining 184,534 policies sold through Insurance.com in 2009 and 2010. Rates for drivers who self-reported continuous coverage were compared with rates for drivers who self-reported a policy lapse of at least one day on their previous policy.

For more information on finding cheap car insurance and articles on understanding different coverage options, visit Insurance.com.

About Insurance.com
Insurance.com is a comparison shopping site that makes it easy for consumers to research, compare and shop for auto and other insurance policies online. The site provides articles that help consumers understand insurance, tackles pressing insurance questions and delivers a fast, free car insurance comparison from well-known insurers with a strong track record of financial stability and customer service. Insurance.com is owned and operated by QuinStreet, Inc. (NASDAQ: QNST), one of the largest Internet marketing and media companies in the world. QuinStreet is committed to providing consumers and businesses with the information they need to research, find and select the products, services and brands that best meet their needs. The company is a leader in ethical marketing practices. For more information, please visit QuinStreet.com.

Press contact:
Jessica Cultra
479-739-2690
jcultra(at)insurance(dot)com

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