Many policyholders pay their car insurance premium on a monthly basis. But sometimes, you might miss a payment due to forgetfulness or because you cannot afford it. So what happens when your car insurance is canceled for non-payment? The short answer is, it depends on the circumstances.
Missing a car insurance payment can be no big deal, but it can also lead to your policy getting canceled. And when you do not have car insurance coverage, you are not legally allowed to drive and you could receive fines from your state and lienholder. Fortunately, there are ways to avoid missing car insurance payments, so you do not end up with a canceled policy.
What to do if you cannot afford your next payment
If your budget is tight, you might know ahead of time that you will not be able to pay your next month’s car insurance premium. In this case, you should contact your auto insurer as soon as possible.
Every insurance company has different policies, but you might be able to request a different payment deadline, perhaps closer to your payday. It is also possible that your insurance provider would let you defer that month’s payment, which means you would pay it later.
If your insurance policy is set to autopay, you may be able to delay the payment by signing into your online customer portal or the insurance company’s mobile application. If you can let your insurance company know before the due date, they might be able to pause the payment for you.
What to do if you have missed a payment
If you miss a car insurance payment, there is probably no need to panic. If it is your first missed payment, your insurance company might let it slide, assuming you are not several weeks overdue.
In this case, contact your insurer as soon as you realize the due date has passed. Sometimes, explaining the situation to an agent can work in your favor, especially if you are a good customer.
Make the payment as soon as possible, and if you are not enrolled in autopay, consider signing up to avoid missing a payment in the future. Many insurance companies, like Allstate and Amica, offer a small discount for drivers who set up autopay.
If you missed your payment by a few days
If your car insurance payment is several days late, the situation could be more serious. Again, it is a good idea to contact your insurance provider right away and talk to an agent about your options.
Many car insurance companies offer a grace period, which gives you some extra time after the initial deadline to pay your premium. Every insurance company has a different grace period, but it typically ranges from 10 days to 30 days.
If you are still within the grace period when you realize your payment is late, you can probably make the payment without facing any penalties. However, if you have been late on more than one payment, your insurer may charge a late fee on top of what you already owe or cancel your policy.
If your car insurance has been canceled
If you are consistently late on your payments, your insurance company will likely eventually cancel your policy for non-payment. You should receive a notification of the cancellation, so this should not come as a surprise.
When your car insurance gets canceled, you are not allowed to drive legally. You will need to purchase another policy and provide updated information to your state’s DMV to make sure your license and registration are still valid. Otherwise, you could face other penalties.
In addition, it is unlikely that you will get away with not making your outstanding car insurance payments. If you do not make the payments, your insurance company could report the unpaid amount to the credit bureau even after your policy has been canceled.
Consequences of missing insurance payments
Missing your insurance payments comes with a number of serious consequences. Having a lapse in insurance coverage can cost you money out of pocket, and it might be much harder to obtain coverage in the future. Here are some of the biggest penalties you might face:
- Policy cancellation: As mentioned, your auto insurer will eventually cancel your policy when you have missed a certain number of payments or get too behind.
- Failure to renew your policy: Not only will the insurance company cancel your policy, but they might not allow you to purchase another policy from them.
- Increased rates: When you purchase a new policy, your rate might be much higher than it was before due to having a lapse in coverage.
- Fines from the DMV: Car insurance is legally required in almost every state, so it is possible that you could receive a fine from the DMV for having a lapse in coverage.
- License/registration suspension: If you get caught driving without valid insurance, it is highly likely that your driver’s license and registration will get suspended until you can show updated proof of coverage.
- Fines from your lienholder: If your vehicle is financed and your car insurance lapses, your lienholder could charge you penalties for not maintaining auto insurance.
- Impacted credit score: Unpaid bills can end up affecting your credit score.
- SR-22 insurance: Somes states require drivers with a lapse in insurance violation to purchase an SR-22 certificate, which is an additional cost.
How to avoid a missed car insurance payment
If you have missed multiple car insurance payments in the past, there are a few things you can do to avoid non-payment issues in the future.
The easiest thing is to enroll in automatic payments, which almost every insurance company offers. Rather than making one-time payments on the due date each month, the money will automatically deduct from your bank account.
When you get a new credit card, make sure to update any bills on auto bill pay that the old card was associated with, including your insurance bill. You might also think about setting a reminder a few days after the due date to double-check that the payment was processed.
Frequently asked questions
What happens if your car insurance payment is late?
If your car insurance payment is late, you should pay it as soon as possible. It is also a good idea to contact your insurance company and let them know. If your payment is several weeks late, you will probably have to pay a late fee.
How long is the grace period if you miss an insurance payment?
Some insurance companies offer a grace period, which gives you some flexibility if you miss the payment deadline. Usually, the grace period is between 10 and 30 days. However, it is a good idea to check your policy documents to see if your provider offers a grace period and how long it is.
Can you reinstate car insurance that was canceled for nonpayment?
It depends. Some insurance companies will allow you to reinstate your policy if it gets canceled, while others will not. If your existing provider will not reinstate your auto policy, you will have to apply for coverage through another insurer or issue a new policy with your current insurer if possible.
What if I cannot afford car insurance?
If you cannot afford a car insurance policy, you may be able to get low-cost coverage through your state. Keep in mind that only a few states offer insurance pools. Additionally, you must meet certain income requirements to qualify.