As soon as you realize you missed your auto insurance premium payment, you should contact your insurer to see if you can pay your premium and continue the coverage or how long time you have before your policy is cancelled. Although companies can decide if they want to cancel your policy due to a late payment or not, most states require that they must serve 10 – 20 days notice of cancellation. In other words, your car insurance company may give you several days to pay the late payment and let your coverage carry on or they can decide to serve you a notice of cancellation. That is why it is important to contact them to find out and make arrangements.
Not surprisingly, late payments are common and many vehicle insurance companies may not send you a policy cancellation notice immediately, giving you time to pay the premium arrears. However, this period can be fairly short depending on the company. Many companies can be quick to issue you a cancellation notice in compliance with the state rules. However, they may still agree to let you pay the late vehicle insurance premiums and keep your coverage.
Cancellation notices can be sent by mail or email. So, you need to read this letter carefully to find out what they are saying. For example, they may say that your policy will cancel at the end of the given period if you don’t pay your premium. If you are habitually late, your insurer may not give you the option of bringing your premium account up to date and keep your car insurance but they may choose to cancel it at the end of the notice period.
Your automobile insurance coverage is still in force during the cancellation notice period and the insurer has to pay for any claims until the end of the notice period.
You are required to carry at least liability vehicle insurance coverage in virtually every state. So, if you want to carry on driving, you need to either reinstate your coverage with your current insurer by bringing the premium payments up to date or buy another coverage from a different company if your current insurer won’t reinstate. In any case, you shouldn’t drive uninsured.
Every vehicle insurance company has different rules for late payments. Often they may charge a small fee for missed installments. Some may insist that habitual late payers pay the remaining premiums in full if they want to keep their policy. And some insurers may decide to cancel the policy with a notice and don’t reinstate it any more. They may still offer you a new quote and sell you a new policy before the cancellation notice expires. Otherwise, you need to find another provider.
Lapse in coverage affects car insurance rates
It is important not to have a gap in your coverage. You will have a lapse on your record, when you have a vehicle and the insurance on it expires. Lapse in coverage will affect your auto insurance rates when you want to buy insurance again. If the lapse is less than 30 days, generally you may see a slight increase in rates. However, vehicle insurance rate increase can be large if the lapse in coverage is longer than 30 days. That is why it is important to make alternative arrangements before your policy lapses to avoid increasing costs.
Driving without insurance has serious consequences
Crucially, you must avoid lapses if you are still driving the vehicle. If you get caught driving uninsured, your vehicle can be impounded, your driver license and vehicle registration is suspended and you get fines. If you cause an accident, you will have to pay for injuries and damages out of pocket. And you may face jail time, if you cause serious injuries to other people or this is a repeat offence, depending on your state’s rules.