Auto insurance is a contract and its terms are covered within the policy. Like any other contract, both insurers and policyholders must honor it. There may be times that they can make concessions. Grace period for car insurance payment or renewal is one of those terms that may be applied loosely. Vehicle insurance companies are usually under no obligation to offer grace periods but they may do regardless of what the policy terms say.
Grace Period for Auto Insurance Payment
Policyholders often ask if there is a grace period for missed automobile insurance payments. One thing you need to clearly know is that once you miss your premium installment you are in the mercy of your insurer. Each carrier would react differently and your history with them can be influential. The bottom line is that you may not have any contractual rights in most cases, with most insurers and in most states.
Most states choose not to legislate grace period and therefore it is totally up to the insurer to offer such period. Even if your insurer offer grace period for late auto insurance payment they usually charge late fees for this service. Quite a few companies would cancel the installment payment plan as soon as a policyholder misses one payment. So, you may have to pay the full premium at once if you want to reinstate auto insurance. If the payment is late more than 2 weeks they may offer you a new quote for a new policy. Generally, policy lapses less than one month may not cause a problem. But any longer lapse in car insurance can increase your premium.
Technically, auto insurance payment is due the moment policy is bought. However, most companies are happy to offer various plans to help policyholders out even though they usually charge for these facilities. Most insurance companies, like any other business, hate late paying policyholders and try to deter such behavior. That is why they charge late payment fees and cancel any intallment plan previously agreed.
Grace Period for Car Insurance Renewal
How about renewals missed? Does your policy cover end the minute your renewal time comes and you don’t pay? I know most auto insurance companies would probably accept your money and honor the renewal quote even several days after. But would they pay a claim that happened only couple of days after the renewal deadline if you paid the premium following the discovery of the loss?
Yes, most auto insurers would welcome customers renewing their policies even a week after. However, they may not be happy to hear that you are renewing your policy because you already have a claim to make. They can turn down the claim and still continue to charge you for the new policy. Because their initial contract with you ended at the end of the renewal day. They can say that you have now taken a totally new and independent vehicle insurance policy with them. Although you are covered now that you paid the premiums required, you were not insured between the time of renewal expiration and start of your new policy.
It may depend on the size of claim as well. They may let a small claim slip but refuse a big one. The bottom line is that they can do whatever they like. Grace period for missed payments is different because you are already on cover. Few companies may offer grace period for missed vehicle insurance payments.
However, renewal date is the official date that your policy expires and you should know it regardless of receiving a renewal notice or not. Besides, most people set up automatic renewal payment in order to avoid missing the date. So, it is hard to pass the blame onto auto insurers or be angry with them for not accommodating. You should always make sure that you don’t take chances with insuring automobiles. You never know what happens and when.