Is an at fault accident covered by an insurer if there was a brief lapse in coverage on a long term contract?

UPDATED: Aug 5, 2012

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UPDATED: Aug 5, 2012Fact Checked

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Is an at fault accident covered by an insurer if there was a brief lapse in coverage on a long term contract?

My wife has monthly payments drafted from her acct for a 6 month policy with an insurer that she has had coverage with for 2 years. She was involved in an at fault accident, at which time she discovered that she was not covered due to a payment that did not clear her bank account. Her policy was canceled 6 days prior to this accident. She made her payment and her policy was reinstated. However the accident wasn’t covered. She now has a judgement against her for damages to the other parties vehicle in excess of $7500. Should this be covered under her policy? What other options does she have?

Asked on August 5, 2012 under Insurance Law, Texas


S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Unfortunately, since your wife's auto insurance had lapsed when the accident occurred, the accident would not be covered.

If your wife can't pay the judgment, you and she could file bankruptcy because the creditor will be going after both of you to enforce the judgment.  Depending on income and other factors, you and your wife may be eligible to file Chapter 7 bankruptcy which is straight liquidation and would eliminate the debt.  If you and your wife are not eligible to file Chapter 7, filing Chapter 13 bankruptcy would be an alternative;  however, Chapter 13 requires a plan (budget) for repayment of creditors.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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