lapse in coverage
A period during which an insurance policy is inactive due to non-payment or failure to renew.
Example
“The lapse in coverage of just two months resulted in higher premiums when she reapplied.”
Memory Tip
LAPSE — even a short gap can increase future premiums and create risk.
Why It Matters
A lapse in coverage can leave you financially vulnerable if an accident or emergency occurs during that gap. Once coverage lapses, any claims filed during that period will be denied, potentially costing you thousands of dollars out of pocket.
Common Misconception
Many people believe they can simply restart a lapsed policy without consequences, but insurers often require new underwriting or may impose waiting periods. Some policies may not be reinstatable at all, forcing you to apply for entirely new coverage.
In Practice
Sarah's auto insurance lapsed for two months when she missed a premium payment and did not receive the renewal notice. During that gap, she was hit by an uninsured driver, and when she filed a claim, her insurer denied it because the policy was inactive at the time of the accident, leaving her responsible for the 8,000 dollar repair bill.
Etymology
From Latin 'lapsus' meaning a slip — coverage slips into inactivity.
Common Misspellings
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