If a resident of the Tar Heel State has a lapse of liability coverage due to either a cancellation or nonrenewal, the state's law requires the auto insurance company to notify the Department of Motor Vehicles (DMV) of the lapse. Upon the receipt of such a notice the DMV will mail a Recertification of Liability Insurance Coverage that requests information certifying that the liability coverage has been reinstated; failure to respond to this notice in the time required may result of the revocation of the vehicle owner's license plate.
Once a license plate has been revoked, in order to relicense a vehicle, the owner must pay a restoration fee following the revocation period. The amount that must be paid is dependent on the number of lapses an automobile owner has had in the past three years. Restoration fees can range from $50 to $150 and a $50 service fee may also have to be paid (if a plate pick up is issued) in addition to any applicable licensing fees. The service fee can be avoided by surrendering the license plate to the DMV 10 day after receiving the revocation notice.
What Can Cause a Lapse of NC Auto Insurance?
There are two ways in which a lapse of coverage may occur for policyholders; the first being cancellation and the other is nonrenewal. One must be aware of the various circumstances that allow a company to either cancel a policy or deny renewal.
A cancellation of a North Carolina auto insurance policy can be executed by either party, but there are certain guidelines that insurers must follow in order to rightfully terminate coverage. A policyholder can simply cancel by either returning the policy to the company or give an advance written notice of what date they wish the cancellation to take effect. When it comes to car insurance companies they cannot simply drop a customer without just cause.
Non-payment of premiums will definitely be a cause for cancellation, but insurers must give at least a 15 days notice prior to canceling the policy; for all other cancellations, customers must receive at least a 60 days notice. The following may be legal ground to lead a carrier to canceling policies:
- The insurer terminates its contract with the consumer's agent;
- The insured has moved out of state and is not eligible for a policy through the reinsurance facility;
- A premium finance company cancels the policy;
- The policyholder knowingly misrepresents facts such as driving experience and record and who resides with the driver and customarily uses the insured vehicle
- Excessive claims or accidents (also applies to nonrenewal)
- No longer meets a company's guidelines such as adding an inexperienced driver or certain vehicles (also applies to renewal)
A nonrenewal can also cause a lapse in coverage, but general should not and is generally a little more cut and dry as far as guidelines. A company can decide not to renew a policy for if an insured no longer meets their guidelines and is legally allowed to do so as long they give at least a 60 day notice; this is adequate time for a consumer to find liability coverage elsewhere and therefore, should not cause a lapse. After receiving a nonrenewal notice a motorist should immediately begin an auto insurance comparison for a new carrier to avoid any penalties from the DMV one the current contract expires.