Is there a grace period for car insurance payments?

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Here's what you need to know...
  • When you enter into a contract with an auto insurance company, you are agreeing to pay your premiums on time to maintain your auto insurance coverage
  • Failure to pay your premiums by the due date could result in a cancellation for non-payment of premiums, which is one of the few reasons that insurance companies can cancel policies before the term is up
  • If you are paying your premiums in monthly or quarterly installments, the company may offer clients a grace period that gives them a short window of extra time to make their payment
  • If you don’t make your payment by the time that the grace period is up, your coverage will be terminated. If you have a loss and your coverage has canceled, the claim will be denied


When you buy auto insurance, it’s your duty as a policyholder to pay your premiums on time. When you don’t have the money to pay your cable bill or your phone bill, the balance will carry over to the next month.

That’s not the case with insurance. If you don’t pay those premiums, the insurance company isn’t obligated to pay claims.

If your insurance company terminates your policy for failing to maintain your payments, you could be in trouble with both your lender and the state.

That’s why it’s important to ask your insurer how long you have to make your premium payments before you assume you have extra time. Some companies offer grace periods, but grace periods are never guaranteed.

You can avoid needing a grace period by ensuring you have the best policy at the best price. Enter your zip code in our FREE comparison tool to get started!

What is a grace period?

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A grace period is the amount of time that you are given to make your premium payment after the due date has passed.

If a carrier offers their policyholders a grace period, they will not terminate the insurance policy immediately after the due date has passed.

Instead of having a lapse in coverage, you will have an allotted period of time to submit your payment. During the grace period, a majority of insurance companies don’t charge late fees.

It’s not until after a policy cancels and it has to be reinstated that a fee will be charged. That fee is charged to cover the expenses associated with reinstating coverage.

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Are companies required by the state to offer a grace period?

Every company has their own rules when it comes to offering grace periods, partly because state law varies so much from state to state.

Some states require carriers to send out a notice of cancellation before a cancellation is processed. Other states consider cancellations for non-payment an exception to this notification rule.

When the advance notification is required, the carrier has no choice but to offer a grace period. The company will send out a notice in writing that the policy is about to be terminated.

The letter will give the termination date and instructions on how to avoid a lapse in coverage. You can find out how much notice the company has to give you by reviewing your contract.

How long is an insurance grace period?

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Grace periods vary in length. In some states, all companies must give their clients ten days to pay their premiums after the due date before the coverage lapses.

In other states, consumers aren’t so lucky. Your grace period can range between three days and 30 days in length. Check with your carrier to find out what your grace period is.

Which carriers are likely to offer a grace period?

Preferred carriers are more likely to offer longer grace periods compared to their high-risk counterparts.

If you have coverage through a substandard company, you’ll probably have a short grace period or no grace period at all.

In a perfect world, you would be able to pay all of your bills by the due date. Unfortunately, life strikes and there may be a month where you have to decide if you want to eat or pay your insurance.

If you can’t afford to make a payment before your grace period is up your policy will cancel. Cancellations are processed at 12:01 am the following day.

Are there consequences for letting your insurance policy lapse?

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Having an insurance lapse for just a few days could result in a lot of penalties. The state takes the crime of driving without insurance very seriously, so you could be penalized even if you’re not cited by law enforcement.

Not only does the state care, your lender cares. Here are a few of the consequences of being uninsured:

  • A misdemeanor if you’re convicted of driving without insurance
  • Fines for being cited
  • Court fees
  • Uninsured accident can lead to wage garnishments
  • Liquidation of your assets to help pay for third-party damages after an accident
  • Loss of your license and registration
  • Fees to reinstate your license and registration
  • Community service
  • Vehicle impound
  • Jail time for multiple offenses
  • Loss of your job or professional license
  • SR-22 filing requirements
  • Force-place insurance through your lender
  • Repossession for failing to maintain full coverage insurance
  • High-risk auto insurance rates

What can you do to avoid a lapse in coverage?

The last thing you want to do is get penalized for letting your insurance lapse. If you don’t want to deal with the consequences, the best thing to do to avoid a senseless lapse is to set up automatic payments.

If you can’t afford your coverage, try and pay for the premiums on a credit card just to maintain your protection until you’re back on your feet.

If you have let your insurance lapse, you should reinstate the coverage immediately.

A consumer who can’t reinstate their coverage should start to shop for coverage immediately. One of the best ways to find affordable rates is to shop around.

You can easily shop the market by using an online rate comparison tool. Enter your zip code and compare quotes instantly with our FREE tool below!

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