What Is Auto Insurance Lapse? 
An auto insurance lapse means that under the terms and conditions of the policy , coverage provided by that policy is discontinued . Typically , a policy lapses for non payment of premium . Coverage can be discontinued for other reasons , for example , if an insured decides to cancel the policy or , conversley , if the company decides to non-renew because the risk no longer meets the company 's guidlines as filed with the state Insurance Department . The State of CT , and many others , require that liability coverage be in force as a condition of the registration of a car . Thus , if a car insurance policy lapses , and the state DMV therefore is notified , the result could be a fine or suspention of the car 's registration or both . Likewise , many car insurance companies will not offer coverage for those who have not maintained continuous coverage . In a case such as that , the car ower would end up being offered coverage usually in a non-standard company at a much higher premium . 