What happens if I miss a car insurance payment or it is late? Say, you did not have enough money in the account and bank refused to pay the next premium installment to your insurer. What happens then, do you automatically lose cover? Can auto insurance companies cancel a policy without giving notice? You need to know the answer to these questions and take precautions accordingly.
Late payments are frown upon by most auto insurers. There is a slim chance some companies would offer a grace period which would be maximum two weeks. If there is a grace period worded in the policy they would stick to it and it would protect the policyholder. If not, even though they have not cancelled the coverage they may dispute a claim on the grounds that you lost your policy the moment you missed payment. This is not how most reputable insurers would play. They would have set grace period for missed payments and out of that period your policy is cancelled.
One thing policyholders should know is that insurers don’t have to offer any grace period for late automobile insurance premium payments in most states. Actually, it is best to assume that there won’t be any grace period and your policy would be canceled if you don’t pay your premium.
Reinstating Car Insurance after Payment Related Cancellation
If you miss a payment you should contact your insurer and discuss a payment option. Quite a few companies charges a late payment fee of around $20. So, try not to miss any payment. Furthermore, some companies may refuse to allow you pay with installment from next renewal if you keep missing payments. Some companies may insist you either pay the remaining premium now or they will not re-instate the cover when you miss more than one payment in one period.
Payment is quite an important part of a vehicle insurance policy. Companies care a lot about the premium collections and can offer discounts for paying it in advance. So, it is worth considering how you will pay for your cover. If you are not good at managing your finances you can make sure by paying in full and avoiding any cancelation. Otherwise, you will need to make sure that you always have money in the bank for the installments.
Lapse in Car Insurance due to Non-payment
Last thing you want is to risk your vehicle insurance coverage. Penalties for driving without insurance can be quite serious depending on which state you live. Also, you would have to deal with DMV since your insurer would inform them of auto insurance coverage lapse. If your insurer informs you of dropped coverage due to non-payment of premium you should see if they would reinstate it. Otherwise, you will need to find another insurer before it is too late. If you are looking for cheap liability only car insurance you can get a few quotes on our quote platform.
Usually lapse in auto insurance coverage is something worse than paying your premium late. When your policy gets cancelled due to non-payment you can easily pick another policy from a different insurer. They don’t know why your policy is cancelled and they don’t need to know. But more than one month lapse in coverage can be recorded in your Motor Vehicle Record and affect your rates from whenever you need insurance again.