Lapse
What Is a Lapse in Insurance Coverage?
A lapse is when a policy coverage is terminated due to non-payment of premiums or failure to renew the policy. Once the policy is lapsed, any claims occurring after the lapse are not covered. In order to get the policy back in force, it would need to be reinstated.
How to avoid a lapse in coverage:
- Log in to your dashboard and turn on auto-pay and EZ Renew
- Set a calendar reminder for your renewal date
- Double-check that your payment info is up to date
What Would Cause a Lapse in Coverage?
A coverage lapse happens when your payment isn’t received or your policy doesn’t renew on time. This can be caused by something as simple as an expired credit card on file. It’s crucial to stay proactive about your coverage — if it lapses, claims that happen during that time aren’t covered.
You can often reinstate coverage by paying overdue premiums, but it’s better to avoid the hassle and ensure your protection remains continuously active.
Lapse vs Cancellation: What’s the Difference?
An insurance lapse is when coverage ends (often accidentally) because of a missed payment or renewal. A cancellation is when you or your insurer actively ends the policy before its expiration date.
What Is a Lapse in Insurance vs Cancellation?
| Aspect | Lapse | Cancellation |
|---|---|---|
|
Cause |
Automatic end due to a missed payment or renewal |
Actively ended by you or the insurer |
|
Timing |
Typically happens after a grace period |
Can happen anytime during an active policy |
|
Coverage status |
Paused until reinstated |
Ends immediately |
|
Reinstatement |
Often possible within a short window |
Usually requires a new application |
|
Responsibility |
Typically on the policyholder |
Could be either party |
|
Financial impact |
May increase future premiums; breaks your continuous coverage |
May trigger fees or loss of unused premium refund |
|
Prevention tip |
Set up auto-pay or EZ Renew |
Communicate early if you need to change or end coverage |
Aspect: Cause
Lapse: Automatic end due to a missed payment or renewal
Cancellation: Actively ended by you or the insurer
Aspect: Timing
Lapse: Typically happens after a grace period
Cancellation: Can happen anytime during an active policy
Aspect: Coverage status
Lapse: Paused until reinstated
Cancellation: Ends immediately
Aspect: Reinstatement
Lapse: Often possible within a short window
Cancellation: Usually requires a new application
Aspect: Responsibility
Lapse: Typically on the policyholder
Cancellation: Could be either party
Aspect: Financial impact
Lapse: May increase future premiums; breaks your continuous coverage
Cancellation: May trigger fees or loss of unused premium refund
Aspect: Prevention tip
Lapse: Set up auto-pay or EZ Renew
Cancellation: Communicate early if you need to change or end coverage
What Happens When a Policy Lapses?
If your policy lapses, you won’t be covered for accidents or losses during that time. Here’s what typically happens:
- A payment or renewal deadline is missed
- The insurer sends a notice (sometimes with a grace period)
- If not resolved, your policy lapses and coverage ends
- Claims during this time are not covered
Can You Reinstate a Lapsed Policy?
Usually, yes! Many insurers allow you to reinstate a lapsed policy within a short timeframe. At Insurance Canopy, we want your business to stay protected, so we send you reminders before your policy lapses.
However, if your Insurance Canopy policy does lapse, you can reinstate your coverage by paying any overdue premiums and submitting a No Known Loss Letter (a letter confirming that you haven’t experienced a loss during the lapse) within 14 days.
Otherwise, it’s just as easy to start fresh with a new policy! Once you do that, your coverage — and peace of mind — will be restored.
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