Vehicle insurance companies are usually under no obligation to offer grace periods but they may do regardless of what the policy terms say. Coverage details, conditions and requirements are laid out in the documents and both parties must honor it. There may be times that they can make concessions. Grace period for a late premium payment or renewal is one of those terms that may be applied loosely. Let’s have a look at the practices, implications and consequences for motorists.
Grace Period for Auto Insurance Payment
You cannot treat them lightly as they may have far reaching consequences. You really need to know where you stand exactly. Even, better you never miss them. One thing you need to clearly know is that once you miss a premium installment you are in the mercy of the insurer. Each would react differently and your history can be influential. They may even not be interested in keeping you any more if you have missed a few already in the past. The bottom line is that you may not have any contractual rights in most cases, with most carriers and in most states.
Most states choose not to legislate grace period and therefore it is totally up to carriers to offer or not. Even if they do they usually charge late fees for this service. Quite a few of them would cancel the installment plan as soon as one missed. So, you may have to pay the full premium at once if you want to reinstate. If it is late more than 2 weeks they may offer you a new quote. Generally, policy lapses less than one month may not cause a problem. But any longer lapse in car insurance can increase rates.
Technically, it is due the moment policy is bought. However, most companies are happy to offer various plans to help customers out even though they usually charge for these facilities. Most of them, like any other business, hate not receiving the money within the agreed time and try to deter such behavior. That is why they charge fees and cancel any plan previously agreed. Some can go even further and report the default to the credit agencies.
Grace Period for Auto Insurance Renewal
Most of them would probably accept the money and honor the renewal quote even several days after. But would they pay a claim that happened only couple of days after the deadline if you paid the premium following the discovery of the loss?
Yes, most would welcome customers even a week after. However, they may not be happy to hear that you are renewing because you already have a claim to make. They would certainly question the motives and ask what would have happened if there were no incidents. 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 last day. They can say that you have now taken a totally new and independent contract with them.
Technically, you were not covered between the time of old policy expiration and start of a new one. Automobile insurance initiates the moment you settle the full premium or the first installment in the agreed settlement plan. It doesn’t really matter that you received the documents or proof. It is up to the company to hold the coverage or not if the payment failed to go through. General view is that most of them don’t like customers who are unreliable settlers because it gives the impression that they don’t care enough or have money problems that lead to other issues on its own.
It may depend on the size of the 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 and few of them may offer it explicitly or in practice but they may still want to hear a good explanation.
However, renewal date is the official expiration date and you should know it regardless of receiving a notice or not. Besides, most people set automatic bank transfers up in order to avoid missing the date. So, it is hard to pass the blame or be angry with anyone for not accommodating. You should always make sure that you don’t take chances. You never know what happens and bad things have a tendency to happen in the worst moment.