Loss of Coverage

• Failure to pay the premiums on an auto insurance policy gives the insurance provider the right to charge late fees or cancel coverage, according to CarInsurance.com. Many providers can automatically debit the policyholder's bank account, preventing late fees or cancellation.
  
  

Financial Issues

• Insurance protects drivers from the financial consequences of auto accidents. Drivers with lapsed insurance policies face stiff court fees and fines while also being charged with paying the other party's medical or auto repair bills, according to the Buy Car Insurance Today website.
  
  

Legal Issues

• Neglected insurance payments can cause serious legal problems if the policyholder continues to drive after allowing the insurance company to cancel coverage. An accident under such circumstances can lead to vehicle seizure, license suspension and possibly even jail time, according to Buy Car Insurance Today.