Many policyholders pay their auto insurance premium on a monthly basis. But sometimes you can miss a payment because of something you forgot or because you can’t afford it. So what happens when your auto insurance is canceled for nonpayment? The short answer is, it depends on the circumstances.
Missing an auto insurance payment might not be a big deal, but it can also cause your policy to be canceled. And when you don’t have auto insurance coverage, you’re not legally licensed to drive, and you could be fined from your state and lien holder. Fortunately, there are ways to avoid missing auto insurance payments so you don’t end up with a canceled policy.
What to do if you can’t pay your next payment
If your budget is tight, you might know ahead of time that you won’t be able to pay your car insurance premium for the next month. In this case, you should contact your auto insurer as soon as possible.
Each insurance company has different policies, but you may be able to request a different payment term, perhaps closer to your salary. It is also possible that your insurer will allow you to defer payment for that month, which means you would pay it later.
If your insurance policy is set up for automatic payment, you may be able to delay payment by logging into your online customer portal or the insurance company’s mobile app. If you can notify your insurance company before the due date, they may be able to withhold payment for you.
What to do if you missed a payment
If you’re missing an auto insurance payment, there’s probably no need to panic. If this is your first missed payment, your insurance company might let it slip, assuming you’re not several weeks late.
In this case, contact your insurer as soon as you realize that the due date has passed. Sometimes explaining the situation to an agent can work in your favor, especially if you are a good client.
Make payment as soon as possible, and if you’re not signed up for automatic payment, consider signing up to avoid missing a payment in the future. Many insurance companies, like Allstate and Amica, offer a small discount to drivers who set up automatic payment.
If you missed your payment by a few days
If your auto insurance payment is several days late, the situation could be more serious. Again, it’s a good idea to contact your insurance provider immediately and speak to an agent about your options.
Many auto insurance companies offer a grace period, which gives you extra time after the original deadline to pay your premium. Each insurance company has a different grace period, but it typically ranges from 10 to 30 days.
If you’re still within the grace period when you realize your payment is overdue, you can probably complete the payment without incurring any penalties. However, if you’ve been late on more than one payment, your insurer may charge late fees on top of what you already owe or cancel your policy.
If your auto insurance has been canceled
If you are consistently late with your payments, your insurance company will likely end up canceling your policy for non-payment. You should receive a notification of the cancellation, so it shouldn’t come as a surprise.
When your auto insurance is canceled, you are not allowed to legally drive. You will need to purchase another policy and provide updated information to your state’s DMV to make sure your license and registration is still valid. Otherwise, you could face further penalties.
Plus, you’re unlikely to get away with paying your auto insurance delinquencies. If you don’t make the payments, your insurance company may report the unpaid amount to the credit bureau even after your policy is terminated.
Consequences of missing insurance payments
Missing your insurance payments comes with a number of serious consequences. Expiring insurance coverage can cost you money and it could be much more difficult to get coverage in the future. Here are some of the biggest penalties you could face:
- Policy cancellation: As mentioned, your auto insurer will eventually cancel your policy when you miss a certain number of payments or are too late.
- Non-renewal of your policy: Not only will the insurance company cancel your policy, they may not allow you to purchase another policy from them.
- Increased rates: When you buy a new policy, your rate may be much higher than before due to an interruption in coverage.
- DMV fines: Auto insurance is legally required in almost all states, so you may be fined from the DMV for losing coverage.
- Suspension of license / registration: If you are caught driving without valid insurance, chances are your driver’s license and registration will be suspended until you can present updated proof of coverage.
- Fines from your lien holder: If your vehicle is funded and your auto insurance expires, your lien holder may charge you penalties for not maintaining auto insurance.
- Credit score affected: Unpaid bills can end up affecting your credit score.
- SR-22 Insurance: Some states require drivers for insurance breaches to purchase an SR-22 certificate, which is an additional cost.
How to Avoid a Missed Car Insurance Payment
If you have missed several car insurance payments in the past, there are steps you can take to avoid non-payment issues in the future.
The easiest way is to subscribe to automatic payments, offered by almost all insurance companies. Rather than making one-off payments on the due date each month, the money will automatically be deducted from your bank account.
When you get a new credit card, be sure to update all auto-pay bills that the old card was associated with, including your insurance bill. You might also consider setting a reminder a few days after the due date to verify that the payment has been processed.
Frequently Asked Questions
What happens if your auto insurance payment is late?
If your auto insurance payment is late, you need to pay it off as soon as possible. It’s also a good idea to contact your insurance company and let them know. If your payment is several weeks late, you will likely have to pay late fees.
How long is the grace period if you miss an insurance payment?
Some insurance companies offer a grace period, which gives you flexibility if you miss the payment deadline. Usually, the grace period is between 10 and 30 days. However, it’s a good idea to check your police documents to see if your provider offers a grace period and how long it is.
Can you restore auto insurance that was canceled for non-payment?
It depends. Some insurance companies will allow you to reinstate your policy if it is canceled, while others will not. If your current provider does not reinstate your auto policy, you will need to seek coverage from another insurer or issue a new policy with your current insurer if possible.
What if I can’t afford auto insurance?
If you cannot afford an auto insurance policy, you may be able to get low cost coverage in your state. Keep in mind that only a few states offer insurance pools. In addition, you must meet certain income conditions to be eligible.