What Happens When Your Auto Insurance Lapses in Maryland?

Written by James Hirby and Fact Checked by The Law Dictionary Staff  

If your auto insurance policy lapsed in the recent past, you're not alone. Every year, tens of thousands of Americans lose their auto insurance coverage to such lapses. In Maryland alone, more than 100,000 auto insurance policies have lapsed since 2000. Although this is a relatively common occurrence, it should never be taken lightly. If you allow your auto insurance policy to lapse without taking immediate action, you could face some serious financial and legal consequences.

Auto insurance policies generally lapse because they're no longer affordable. In all likelihood, your policy has fallen into arrears because your provider raised your rates without warning and upended your household's budget. Although this might be frustrating, it's important that you recover from the initial shock of losing your insurance coverage and try to make the best of the situation. After learning of your policy's cancellation, you'll need to make several quick moves. In most cases, you'll receive several warnings before the lapse becomes official. As long as you take action, you should be able to renew your coverage without interruption.

First, read over the letter that accompanied your cancellation notice. This document should provide a clear explanation of the reason for your policy's cancellation and outline some clear steps that you can take to renew your coverage. If the letter doesn't provide this information, call your insurance company immediately and demand an explanation for your policy's cancellation.

If you can't renew your coverage in a timely fashion, you'll need to remove your vehicle's license plates and mail them to the Maryland Motor Vehicle Administration. If you fail to do this before your policy's official cancellation date, you'll be subject to a $150 fine as well as a $25 "registration renewal" fee. While this seems like a steep penalty, it's mild compared to Maryland's financial and criminal penalties for driving without insurance. If you're caught driving an uninsured vehicle, you could be subject to a fine of $500 or more and a jail sentence of up to six months.

However, you should be able to avoid these fines. When you call your insurance company, be sure to ask about your policy's post-reinstatement premiums. Although you're unlikely to be given an exact quote, you'll probably get a ballpark figure that will enable you to map out an out-month budget. If the quote seems unreasonable, you'll need to start sourcing quotes from the other auto insurance companies that do business in Maryland. Unfortunately, these are likely to be high as well.

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