What if my car insurance payment is late?

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Here's what you need to know...
  • When you buy auto insurance, most companies offer different premium payment options so that you don’t have to pay in full
  • The most common payment plan options include monthly, five-pay, quarterly, semi-annually, and Electronic Fund Transfer
  • When you choose a payment plan option, your due date will typically be on the same day of the month
  • Grace periods range in length between one to 30 days, depending on the carrier and the state requirements
  • If you don’t have a grace period or you don’t make a payment before the grace period is up, your coverage will cancel for non-payment

When you buy auto insurance, it’s your responsibility as a client to pay your premium payments on time. In fact, your insuring agreement specifically says that you must pay your premiums and comply with all of your duties as an insured for your claims to be covered.

If you fail to keep your payments up to date, you are at risk of having an uninsured loss.

If you’re on a limited budget and you’re having difficulty paying your bills, it’s important to know the consequences of being delinquent on each account. Being late on a credit card payment can ding your credit and be late on your cell phone bill can leave you without service.

The consequences of being late on your insurance can be greater than you’d expect. Here’s what you need to know before you procrastinate.

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You Pay Insurance Premiums Upfront

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It’s important to understand how you’re billed for your insurance coverage to really grasp why it’s so important to make your payments on time. With some service providers, you pay for something after you’ve used the service.

Since insurance is a product that you don’t use on a regular basis, you pay before the coverage date instead of after.

For example, if you buy insurance with a term from June first to December first, and you pay your premiums monthly, the payment that you make on November first will buy you coverage from November first to December first.

Since you’re paying for coverage that you may or may not use, all insurers will charge you upfront.

Your Payment Plan Options

When your premium payments are due depends on the installment option you selected. If you pay your premiums in full each term, your next payment won’t be due until your renewal.

The renewal is the same date as the expiration date that’s listed on your most current ID card or declarations page.

If you prefer to split up your payments so that you don’t have to pay the entire policy premium at once, you can choose from a few different payment plan options.

Many insurers offer you the option to choose a plan that suits you best. Here are the most common options:

  • Monthly – Payment due on the same day of each month (manual payments or EFT)
  • Quarterly – Payment due on the same day of the month once every three months
  • Semi-annually – Payment due once every six months on annual policies
  • Five-pay – Make a two month down payment and payment is due the same day of each month for five months with one month off

When is a payment considered late?

Your car insurance payment is considered late at 12:01 am the day after your due date. Insurers are very specific as to when a payment must be posted.

If you don’t process your payment by phone, online, or in-person before the due date, the carrier may charge you late fees or cancel your coverage altogether.

Is there a grace period?

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Not all insurance companies offer grace periods. Since very few states require insurers to give their policyholders a grace period, the terms will vary from carrier to carrier.

Most preferred insurers offer longer grace periods than substandard providers. The grace period can be as short as one day and as long as thirty days.

What happens when you don’t pay before the grace period is up?

If you don’t make your payment by the due date and your grace period expires, your policy will be canceled for non-payment. When your coverage cancels, the state will be notified that your coverage is no longer active.

If you can’t provide proof of insurance for the period when the policy lapsed, you could be fined or your registration could be suspended.

If your policy has canceled, see if you can reinstate it. If that’s not an option, you can shop around for better rates and then start a new policy. The best way to shop around is an online rate comparison tool.

Just enter your zip code in our FREE tool below and you can get instant quotes from reputable carriers.

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