Car insurance helps protect you, your car, and others financially. But if you miss payments or let your policy lapse – even for a short period of time – it can lead to some problems. You might pay more in the long run and lose cover when you need it most.
Let’s break down why it’s important to keep your car insurance up to date, what a car insurance policy lapse means, and what you can do if your policy has already lapsed.
What is a car insurance policy lapse?
A car insurance policy lapse is when your insurance ends, and you no longer have active cover. This usually happens if you miss a payment, cancel your policy without getting a new one, or forget to renew it on time.
Do insurance companies offer a grace period?
Most South African auto insurance companies offer a grace period, which is a short time (usually a few days) after your payment is due. During this time, your car insurance coverage might stay active even if you haven’t paid yet.
But if you miss the grace period too and your insurance policy lapses, you’ll no longer have cover. Always check the terms and conditions of your policy or speak to your insurance agent to understand your grace period.
At Prime, we’ll do our best to help you stay covered even when you struggle to pay your premium, but communication is key.
A lapse in car coverage can cost you more
A lapse in coverage can lead to long-term financial stress. Let’s explore how.
1. Higher car insurance rates
If you reinstate your policy after a lapse, your premium may be adjusted based on your new risk profile. This could potentially lead to a premium rate increase, even if the gap was short.
2. Trouble getting new cover
Some companies might not want to insure drivers with a previous insurance lapse. Or they may offer limited coverage options at a higher price.
3. You may have to cover damages
In South Africa, driving without insurance is not illegal, but it is risky. If you’re in an accident and you don’t have cover, you might have to pay for all the damages from your own pocket.
What does a policy lapse mean for financed cars?
Most lenders require you to have comprehensive car insurance until the car is fully paid off. If your car is still being paid off through car finance, a policy lapse can cause even more problems.
1. Car insurance for financed cars is usually a must
If you’re still paying off your car, having valid insurance is typically part of the finance agreement. Letting your insurance lapse could potentially lead to extra admin, fees, or even the risk of having your agreement reviewed.
2. Your bank might take action
If your car isn’t insured and your lender becomes aware, they may ask you to reinstate cover straight away. In some situations, they might even set up an insurance policy on your behalf, which could come with higher premiums and limited flexibility.
3. You still have to cover the costs yourself
If you’re in a car accident while uninsured, you still owe the bank the full amount on your finance deal. That could leave you with repair costs and monthly payments for a car you can’t drive.
What to do if your car insurance has lapsed
If your policy has already ended, don’t panic. Let’s look at what you can do.
1. Contact your insurance agent immediately
Your insurance agent may be able to activate your policy again if the period of time since it lapsed is short. Be honest about what happened and ask about your options.
2. Compare new policies
If your previous insurer can’t help, compare quotes for a new policy. Some insurers may still offer good coverage options, even after a lapse. Start by comparing plans or reading about the different types of car insurance.
3. Apply online
Ready to get covered again? Use Prime South Africa’s online quote tool to find a plan that fits your budget and driving needs.
How to avoid a lapse in the future
Here are some tips to help you keep your cover active.
Set reminders for payment due dates
Life gets busy, and it’s easy to forget a due date. Use your phone, calendar, or an app to remind you a few days before your payment is due.
Set up a debit order if possible
Debit orders are one of the easiest ways to avoid missed payments. Your premium will be taken from your bank account automatically each month. This means you won’t forget to pay, and your insurance will stay active.
Update your contact details with your insurer
If your phone number or email address changes, let your insurer know. That way, you’ll still get important messages about your policy, like payment reminders, policy changes, or renewal notices.
Read the terms and conditions carefully
Each insurance policy is different. Make sure you know what your policy says about late payments, grace periods, and cancellations. This helps you avoid surprises.
Talk to your insurance agent if you’re struggling to pay
If you think you won’t be able to make your next payment, contact your insurer as soon as possible. They may be able to help you by adjusting your payment date or offering a different coverage option that fits your current budget.
Get car insurance today
Letting your car insurance policy lapse can seem like a small thing, but it can lead to big problems for you. From higher monthly premiums and lower credit scores to losing your car or having to cover damages yourself, a short gap in cover can cost you far more than you think.
Don’t wait – Prime’s car insurance plans can be customised to meet your budget. Compare our car insurance options today so you can get back behind the wheel with peace of mind as soon as possible.
Disclaimer:
This article provides general information about car insurance policy lapses and what you can do to avoid them.
Always conduct your own research and consult a certified financial advisor to select the best insurance policy for your needs.
Get a quote for affordable comprehensive cover from Prime South Africa and enjoy fixed premiums*, reducing excess*, and top-tier service. T&Cs apply.
