You might have a grace period if you miss a car insurance payment. After that, your policy could be canceled and your rates could go up.
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The longer you don't have car insurance, the more your rates will go up when you reenroll. You're required to have insurance to drive, so some states may revoke your driver's license.
If you've already missed a payment, call your insurance company right away. The insurance company may give you a break if you have a good track record.
What to do if:
What to do if you can't afford or miss a car insurance payment
As soon as you realize you will likely miss or have already missed a car insurance payment, call your insurance company to let them know you're aware of the situation and ask what you can do next. The options available will depend on how long you've gone without paying your car insurance bill, your insurance company's policies and the laws of your state. But no matter the details of your situation, it's key that you communicate with your insurance company to figure out an arrangement. Ignoring or delaying the issue will only make your problems worse.
If the payment is not yet due
If your auto insurance payment is not yet due, or it hasn't been processed but you know you won't be able to afford it, you may be able to postpone payment or extend the due date temporarily while you come up with the money. Depending on your insurer, you may not even have to call an agent to do so. For example, Geico allows customers to delay autopay bills by up to nine days through the company's mobile app.
The agent you're working with may have some discretion about how much leeway to give you, especially if you have a credible reason why you won't be able to make the payment. They may also be able to arrange a partial payment to keep you insured if your insurance company allows it.
If you've missed a payment by a few days
If you've only missed the payment by a few days to a week, you likely can reinstate your policy without a lapse in coverage or other serious consequences, as you're still in the grace period. You'll have to pay the amount you missed, usually with a late payment fee. Make sure to do so promptly, though, as the grace period may vary.
If your car insurance has been canceled
If your insurance bill went unpaid long enough for your coverage to be canceled, you'll have to apply for a new policy. Unfortunately, your rates will likely increase, as car insurance companies charge more for drivers who have had their insurance terminated due to missed payments. It's even possible that your previous insurer will not offer you insurance at all, in which case you'll need to go with another company, such as a nonstandard insurer.
Besides facing higher rates, it's also possible that it will be more challenging to find insurance if you've let your policy lapse. Letting your policy lapse is one sign to insurers that you're a high-risk driver.
If you're having trouble finding coverage after a lapse, you may have better luck at a company that specializes in high-risk drivers, such as The General or SafeAuto. However, we recommend putting in the extra work to find coverage at a mainstream insurer if you can, as you're likely to find better rates and service at this type of company.
It's illegal to drive without insurance in nearly every state, so once your insurance is terminated, you won't be able to drive. The longer you go without coverage, the bigger the price increase will be when you get a new policy. A 15-day lapse could result in an 8% lapse, while a 45 day lapse could result in a 24% jump.
After you have insurance again, you should contact your state's department of motor vehicles (DMV) to update your insurance info and confirm that your registration and driver's license are still valid. You should also make sure you don't owe your old car insurance company money. It may eventually pass any overdue debts to a collection agency.
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What happens when your car insurance is canceled because you missed a payment?
If you miss a car insurance payment, you'll get a legally required notice of cancellation from your insurer. This notice may come in the mail or by phone call or email.
You'll usually have 10 to 20 days between the date of the cancellation notice and the date you are no longer covered. The exact amount of time differs by state. After that, your insurance will officially lapse and you'll no longer be able to drive your car legally. In some states, letting your insurance lapse also voids your registration — either right away or a few weeks after your insurance lapses. But no matter where you live, the longer you wait before rectifying the problem, the greater the consequences will be. So make sure you contact your insurance company immediately.
Long-term consequences of canceled insurance due to missed payments
If your car insurance lapses or is canceled, whether it's because of nonpayment or any other reason, you will likely face financial ramifications of some kind. The consequences can continue even after you have reinstated your insurance. Here are some possible outcomes of missing your car insurance payments.
- Administrative fees at the DMV: Some states will charge you for even a brief lapse in insurance coverage. For example, in New York, drivers have to pay $8 per day for up to 30 days during which their insurance was lapsed, with increased penalties thereafter.
- Car registration or driver's license suspension: Nearly every state requires drivers to insure their cars in order to register them, and many states require insurance companies to notify them if drivers let their insurance lapse. This could result in the automatic suspension of your car's registration or your driving privileges, leaving you unable to legally drive. You might even be required to carry an SR-22 if you are caught driving while uninsured, especially if you cause an accident.
- Higher auto insurance rates: Insurance companies like to see that drivers can reliably pay their bills on time every month. People who let their coverage lapse, even for a short amount of time, will likely see an increase in car insurance prices the next time they renew.
- Repossession of a loaned/leased car: Most car lenders require you to have full insurance coverage on the vehicle as long as the vehicle is financed. If your car lender finds out you are not carrying insurance on the vehicle, it may repossess the car.
- Your credit score can drop: If you owe money on your car insurance and your insurer passes the debt to a collection agency, it will likely impact your credit score. This can affect your ability to get a credit card or loan, and the derogatory mark will remain on your credit report for up to seven years.
Frequently Asked Questions
What happens if I pay my car insurance late?
If you pay your car insurance a couple of days late, you will most likely still be in the grace period. However, you will probably be charged a late payment fee. If your payment is later than the grace period allows, your insurance can lapse.
How long is the grace period before your insurance policy lapses?
The grace period for late payments before your policy lapses varies by insurer and by state. The grace period is typically anywhere between one and 30 days. It is very important to know the grace period for your policy and to contact your insurer if you expect to make a late payment.
How can you reinstate canceled auto insurance?
When your auto insurance is canceled, the first thing you should do is call your current insurer. If your policy has only lapsed for a couple days, it’s possible they can reinstate it. If your insurer requires you to get a new policy, you should shop around to search for the best rate.