Can Auto Insurance be Retroactive? Answers Here

There are a lot of reasons you might let your auto insurance lapse. Regardless of the reason, you know it’s a problem. Drivers are required to maintain coverage. If you find yourself in this situation, you may be wondering if you can purchase an auto insurance policy and have it start retroactively.

The answer is no. You cannot get backdated or retroactive auto insurance coverage.

Retroactive Auto Insurance Policies and Uninsured Drivers

Your intentions might be good. You simply made a mistake and missed a premium, and now you’re trying to avoid any legal or contractual problems that the lapse could cause. You’re willing to pay for the coverage now that you should have paid for before.

However, trying to secure a retroactive car insurance policy is not going to fix your problems. The attempt could even make things worse.

Although car insurance is legally required under state laws, many drivers do not maintain coverage. According to a study conducted by the Insurance Research Council, 13 percent of U.S. drivers were uninsured in 2015. In some states, the figures are even worse. In Florida, for example, 26.7 percent of drivers were uninsured. That’s more than one out of every four drivers.

If one of these drivers causes an accident, they may quickly regret their decision to drive without insurance. Not only will they be held personally responsible for any property damage or injuries they cause, but they will also face penalties for driving without insurance, and their license could be suspended.

When this happens, the uninsured driver may try to fix the problem by obtaining backdated car insurance. This can be considered a type of fraud, and it is not allowed.

Underinsured Drivers Also Face Problems

Even drivers who meet their state’s legal requirements for car insurance may find that they don’t have enough coverage when things go wrong.

Most states only require liability coverage. If you cause an accident, your liability coverage will pay for the property damage and injuries experienced by the people you hit, up to the limits of the policy. However, liability insurance does not cover any damages to your own vehicle. It doesn’t cover theft, either. For these types of coverage, you need comprehensive and collision insurance.

To save money, many people only get liability insurance. When their car is stolen or totaled, they may realize that they were underinsured. Once again, getting retroactive auto insurance coverage is not an option.

What to Do Instead

Once an accident or other incident occurs, you’re stuck with whatever coverage you have at the time. You cannot change your coverage retroactively. To avoid this situation, maintain continuous car insurance coverage, and make sure you have enough coverage in case something happens.

If your car insurance has lapsed for any reason, contact your insurer immediately to get your insurance reinstated. If your insurance has lapsed for only a short period of time and you haven’t experienced any losses, there’s a good chance the insurer will let you reinstate your policy. However, if you cannot get your previous policy reinstated, you will need to purchase a new policy.   

Want to know your auto insurance options? Get an auto insurance quote from Insurance Line One.

Sources
  • https://www.iii.org/fact-statistic/facts-statistics-uninsured-motorists

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