Cost of dropping auto insurance to increase

Raleigh, N.C. — Penalties charged to vehicle owners who repeatedly drop liability insurance coverage will increase July 1, officials said Wednesday.

The change will affect vehicle owners who have numerous insurance lapses within a three-year period. The new rates will be $50 for no previous lapses within three years, $100 for one lapse and $150 for two or more lapses.

The new law, passed by the General Assembly in 2007, is the first change in the insurance lapse penalty of $50 since 1957.

Insurance companies are required to notify the state Division of Motor Vehicles within 20 business days after they issue a new or replacement policy, terminate a policy or reinstate a policy. When a policy is terminated, the DMV sends a letter to the vehicle owner, requiring his or her response within 10 days.

Resulting actions are based on the vehicle owner’s response and his or her record of accidents and financial responsibility. Owners may face a combination of penalties or revocation of vehicle registration.

10 Comments

WRAL.com welcomes your comments on this story. All comments are moderated prior to publication based on our posting guidelines. Please review them prior to posting and if your message is not approved.

VIEW ALL 10 COMMENTS

This story is closed for comments. Comments on WRAL.com news stories are accepted and moderated between the hours of 8 a.m. and 8 p.m. Monday through Friday.

Latest Comments

This is annoying but don't let it stop you from getting competitive quotes on your insurance. After making a switch last year, it feels good not to be paying State Farm's bloated rate.

Madonna
June 25, 2008 5:05 p.m.

Can you say illegal alien? That is the group that does this the most. So first the cost us higher uninsured rates for that insurance, and now this. Thanks Mike easley for creating this problem.

whatelseisnew
June 25, 2008 4:21 p.m.

So does this mean that if I have had the same insurance company for several years and just decide to change to get a better rate I will be punished by a $50 fine?

As long as you do not have a lapse in coverage you should be OK. Well I just changed co's and Progressive sends me a bill for $95. Saying, that by law they had to maintain coverage for me for an xtra 10 days. Now how does that add up to $95? And why is this the first time I've ever heard of this "law"?