What to do when your car insurance is canceled for a missed payment
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Many policyholders opt to pay their car insurance premiums on a monthly basis. However, there are times when you might miss a payment due to forgetfulness or because you cannot afford it. In some cases, missing a car insurance payment can be no big deal. But in other circumstances, it can lead to your car insurance policy getting canceled, all of which can have massive repercussions.
So when is a missed payment a minor issue, and when would your car insurance be canceled for non-payment? And, if that happens, what should you do to fix the issue? The short answer is that it depends. If you’re worried about missing a car insurance payment, here’s what you should know about the grace period for car insurance lapses, what to do when your car insurance is canceled for a missed payment, and other potential consequences that may arise.
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 is a car insurance lapse grace period?
When you are buying auto insurance or signing up for a renewal, one of the things you need to think about is being able to make your payments on time. Insurance companies generally set a specific date and time in which they expect to receive your payment, and if you miss it, they could cancel your policy. In some cases, insurance companies have the option to cancel your car insurance policy even if you’re just one day late on your payment.
However, most auto insurance companies understand that life can be challenging, so many will offer their customers a grace period. Depending on the company, the grace period for payment typically ranges from 10 to 30 days, which can offer you some leeway before cancellation when you are late with a payment for your car insurance policy. If you still have not made the payment after the grace period, your car insurance company may cancel your policy and the cancellation could be retroactive to your original payment date.
What to do if you have missed a payment
If you miss a car insurance payment, there may be 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.
Either way, you should contact your insurer as soon as you realize the due date has passed. Explaining the situation to an agent can sometimes work in your favor.
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 will also offer a small discount for drivers who set up autopay.
If you missed your payment by a few days
Many car insurance companies offer a grace period, which gives you some extra time after the initial deadline to pay your premium. If you are still within the grace period when you realize your payment is late, you can probably make the payment without facing any significant penalties other than a possible late fee on top of what you already owe.
If your car insurance payment is more than 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.
If your car insurance has been canceled
If you do not have a grace period for payment on your policy or if you do not pay within the grace period, your insurance company may 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, 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. Lienholders may even take out insurance on your behalf, called force-placed coverage, and add the premium amount to your loan payment.
- Impacted credit score: Unpaid bills can end up affecting your credit score.
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
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.
The grace period for missing an insurance payment varies by insurer. However, the average grace period typically ranges from between 10 and 30 days, which can add some flexibility to your payment schedule. If you want to know whether your specific car insurance policy offers a grace period and how long it may be, you can check your policy documents or contact your insurance company or agent to learn more.
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 have your current insurer issue a new policy if possible.
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.