Business and individuals purchase insurance policies as a means of protecting themselves from unexpected losses that might occur. An insurance policy may be terminated in a variety of ways: it may lapse, be terminated by the insurance company, or be cancelled by you, the insured. Lapse of an insurance policy generally occurs as a natural consequence of the end of the agreement of insurance coverage according to the particular policy language. Lapse of coverage is distinctly different than cancellation of an insurance policy in that lapse generally does not require notice to you, the insured, whereas cancellation generally does. The reasoning for requiring notice for cancellation arrives from the public policy argument to allow an individual time to obtain new coverage.
Generally speaking, an insurance company is not required to give you notice prior to the lapse of an insurance policy because it is presumed that you have knowledge of the insurance policies duration. Under Louisiana law, if an insured fails to pay the premium due, the insurance contract entered into between the plaintiff and defendant lapse under its own clear terms. Guidry v. Shelter Ins. Co., 535 So. 2d. 393, 396 (La. Ct. App. 1988). However, some states do require that an insurance company give their insured notice prior to lapse. The variance in each states law makes evaluation and analysis of cases involving lapse in insurance coverage very complicated.
It is important to note that an insurance company may waive lapse of insurance coverage for non-payment if they accept and retain the past-due premium. It is also possible that conduct by the insurance company may estop them from claiming lapse of an insurance policy.
The complex nature of the lapse of insurance coverage makes it imperative that you retain competent insurance coverage counsel that fully understands lapse in insurance coverage matters, the distinction between lapse and cancellation of coverage, and the implications of each. At the Berniard law firm, we seek to ensure insurance companies meet their obligations. We seek to ensure you receive any and all coverage you are entitled to under your insurance policy.
We have experience dealing with lapse in insurance coverage matters and have the experience necessary to understand your legal needs. We have a substantial knowledge base of insurance coverage and understand the importance of these matters. The innovative hands-on approach taken by our firm ensures that your rights under the insurance policy are protected.
Speak With an Attorney Today
The Berniard Law Firm is happy to speak with you regarding your lapse in insurance coverage matter. There are two ways to contact us regarding your coverage dispute you may CALL us at (504) 521-6000 to speak with an Attorney about your lapse in coverage matter, or you may complete the CONTACT US form, in which case an Attorney will contact you within 24 hours.
All initial consultations are free and all cases are handled on a contingency fee basis. This means that there will be no costs for you unless there is a settlement of your case or an award by a court. Please contact us today so we may immediately begin working on your case to get you the compensation you deserve.
Co-Counsel and Expert Consultation Services
The Berniard Law Firm is happy to take on any role necessary to help individuals and businesses obtain coverage they are entitled to. The Berniard Law Firm has worked in a variety of roles as lead counsel and co-counsel, as well as consultation and expert services. Our attorneys have worked with corporate counsel, corporate risk managers, public insurance adjusters, corporations and contractors during all phases of the claim process from claims adjustment and investigation to mediation, litigation, and all other phases of the claims process. Please CALL the Berniard Law Firm today to speak with an attorney regarding our services. We thank you for your time and look forward to working with you to ensure you get the coverage you paid for.
FAQs
Consequences of a car insurance lapse
Not having insurance: If your auto insurance expires or is cancelled, your biggest concern is not having coverage. That means if you cause an accident and injure someone else or damage their car, you'll have to pay completely out of pocket. Same goes for damage to your car.
What does a lapse in insurance coverage mean? ›
What Does It Mean to Let Your Insurance Lapse? A car insurance lapse is a period of time when you own a car but you don't have car insurance coverage. A lapse in coverage can happen because you didn't pay your car insurance premiums or you were dropped from your insurance company.
What is the lapse process in insurance? ›
Definition: The policy for which all benefits to the policy holder cease and is terminated due to non payment of premium amount on the due date or even after the grace period is called a lapsed policy. Description: Excessive delay in payments and servicing of the policy leads to the policy being dead or lapsed.
How long does a lapse in coverage affect your rates? ›
As a result of a lapse in coverage, your insurer will likely raise your rates. Based on our analysis, drivers with a coverage lapse of 30 days or less saw an 8% average car insurance rate increase. And those with a coverage lapse greater than 30 days saw an average rate increase of 35%.
Why do insurance companies care about lapse in coverage? ›
During a lapse, there is no insurance coverage, and if an accident occurs during this period, the driver would be responsible for all related costs. Additionally, lapses can lead to increased premiums in the future, as insurers often view a driver who goes without coverage as high risk.
Does lapse mean cancel? ›
A lapse is the removal or expiration of a privilege, right, or policy due to the passage of time or some sort of inaction. A lapse of a privilege due to inaction occurs when the party that is to receive the benefit does not fulfill the conditions or requirements set forth by a contract or agreement.
Can a lapsed insurance policy be reinstated? ›
If it has only been a few days since your policy has lapsed, you can likely reinstate the policy without much hassle. If it has been several months or years, you might be able to reinstate your policy, but you will likely have to go through a reinstatement process with a new application.
What is the difference between surrender and lapse? ›
Surrender. A life insurance lapse occurs when you unintentionally fail to pay premiums, leading to an automatic termination of the policy. On the other hand, a surrender happens when you intentionally end your policy before its term, usually in exchange for the cash value it has accrued.
Can I get my money back if my policy lapsed? ›
Insurance Lapse Meaning
In such cases, the policy lapses and all benefits and coverages offered are terminated if the due amount is not paid by the end of the grace period. Usually, there is no provision for a lapsed policy refund for insurance policies.
Who gets benefited if a policy is lapsed? ›
A lapsed policy occurs both in case of missed premium payment and if cash surrender value is exhausted in case of a permanent life insurance policy. The policyholder and their family will no longer be entitled to receive life coverage or insurance policy benefits in case of a lapsed policy.
Answer: A membership becomes expired on the expiration date specified on the membership record. A membership is lapsed during the time between when it expires and when it is dropped.
What is the difference between lapsed and cancelled policy? ›
Lapse of coverage is distinctly different than cancellation of an insurance policy in that lapse generally does not require notice to you, the insured, whereas cancellation generally does.
Does a lapse in insurance affect credit score? ›
The short answer is no. There is no direct affect between car insurance and your credit, paying your insurance bill late or not at all could lead to debt collection reports. Debt collection reports do appear on your credit report (often for 7-10 years) and can be read by future lenders.
What happens if your insurance gets cancelled? ›
You'll have to declare a cancelled policy to any new insurance provider. A cancelled policy is a red flag to insurance providers and you may struggle to find a mainstream provider to cover you. You may also end up paying a lot more for your car insurance.
What happens if your insurance gets cancelled for non-payment? ›
It depends. Some insurance companies will allow you to reinstate your policy if it gets canceled, while others will not. If your existing provider will not reinstate your auto policy, you will have to apply for coverage through another insurer or have your current insurer issue a new policy, if possible.
Should I let my life insurance policy lapse? ›
If you no longer need or can no longer afford) your life insurance policy, don't let it lapse, says Frank Darras, a California attorney who specialists in insurance matters. Instead, consider selling it on the open market.
