Typically, when a car insurance premium goes unpaid, the insurer will send a notice to the policyholder to inform them of the outstanding payment. This notice often includes a grace period during which the payment must be made to avoid policy cancellation. The length of the grace period can vary, but it is commonly around 10 to 20 days. If the premium remains unpaid beyond the grace period, the insurance company has the right to cancel the policy and decline paying for claims occurred after this date. The specific timeline may vary depending on the insurer, state and the terms outlined in the policy.
Most states require automobile insurers to serve a cancellation notice before they can terminate a policy. This could be between 10 to 20 days depending on the company and state. Motorists should contact their insurers or read the late payment notifications they received and react quickly. Car insurance policies may not be cancelled immediately after missing a premium installment but it is essential to deal with it in a timely manner.
Many companies would continue the coverage if the late premium payment is made within the grace period. However, some companies may just serve a cancellation notice and not offer an option to make up the premium arrears, especially if you are a habitual late payer or a new customer.
In such cases, you may have to find an alternative auto insurance policy from another company to replace your current coverage. If you do this before your policy lapses, you can avoid paying higher premiums since nearly all insurers would charge more if they see a lapse on your record.
If you didn’t make up the arrears and the notice period is over, the current insurer may agree to re-insure the coverage. In most cases, they will issue you a new car insurance policy.
In many states companies would inform the DMV once a vehicle insurance policy lapses due to nonpayment. Since virtually every state requires at least minimum liability coverage, the DMV may write to you for an explanation or proof of new coverage.
It is best to inform your current provider if you stopped the premium payments because you bought another car insurance policy from a different company. Otherwise, they would naturally keep billing you and expect you to pay them. By doing so, you make sure the company doesn’t continue charging you for time-on-risk and you may even get a refund for overpaid premiums.
Missing the premium and not remedying the situation quickly will leave you exposed. Regardless of whether you know your policy is lapsed or not, driving an uninsured car is against the law. If you know that you missed your vehicle insurance premium payment, you shouldn’t drive until you make sure the issues are sorted and you have coverage one way or another.
Consequences of driving without insurance are serious. You receive a fine, your license and registration may be suspended, vehicle may be impounded until you come back with insurance and settle the costs. You may also be prosecuted, especially if you cause an accident.
Furthermore, you have to pay all the damages to your vehicle and the damages and injuries you caused to other people out of pocket if you ever get into an accident without insurance. Not only do you comply with the state laws but also buying car insurance can help you pay for the damages and injuries and auto theft if you have the relevant coverage. That is why you should not only purchase a suitable policy for your automobile but also make sure it remains in effect.
It is important to note that insurance laws, regulations and practices of each company can vary by jurisdiction, so it’s always best to consult your specific policy documents or contact your insurance provider directly for accurate and detailed information regarding cancellation policies and procedures.