How Long is the Grace Period for Auto Insurance?
Last Updated on September 30, 2021
Does your car insurance policy come with a grace period? Will your insurer give you an extra few days to make a payment? Does your insurance end immediately after you miss a payment?
These are all good questions. Today, we’re explaining everything you need to know about the grace period for auto insurance policies.
Most Insurance Policies Have At Least a 5 Day Grace Period
Insurance companies typically offer a grace period of at least 5 days. If you miss your insurance payment, then you may have about 5 days to make the payment.
Beyond the range of this grace period, your insurance policy might be immediately canceled.
It’s important to note that grace periods vary widely between insurance companies. Some companies are relatively generous and offer grace periods of 30 days to make a payment. Other companies are strict and have grace periods of just 3 days.
It’s also important to remember that some companies will charge late fees on your payment while other companies will not.
In any case, if you make your insurance payment within the allotted grace period, then your insurance policy will continue without a lapse in insurance coverage. If you fail to make the payment within the grace period, then you’ll likely have a gap in coverage. You can purchase short-term insurance while you contact your insurer to make things right. Or, you can avoid driving until you catch up on payments.
Below is a list of typical grace periods by insurer:
|Insurer||Usual Grace Period|
|Liberty Mutual||10 days|
|State Farm||0-10 days|
Not All Insurance Companies or States Have Grace Periods
If you just read the paragraphs above, then you might feel like a weight has been lifted off your back.
Unfortunately, not all insurance companies or states have grace periods.
In New York, for example, no insurance companies offer grace periods.
Grace periods are extra perks. They’re not required. Don’t automatically assume your policy comes with a generous grace period. When in doubt, talk to your insurance company. Or, read your policy. Your declarations page should explain any grace period information.
What Happens If You Have an Accident During your Grace Period?
The reason it’s called a grace period is because your insurance company is graceful enough to maintain your coverage even when they haven’t received payment from you on-time.
Typically, your insurance company will honor your policy during the entire grace period. The moment the grace period is over, however, things will change. If you get into an accident at 12:02am and your policy’s grace period ended at 12:01am, then you might end up paying for everything out-of-pocket.
What Happens After the Grace Period is Over?
If the grace period is over and you still haven’t made a payment on your insurance policy, then you no longer have car insurance.
At this point, it’s not as simple as paying your insurance company to renew your policy.
Instead, your insurance company might charge late fees. They might even raise your premiums because you’re seen as a higher-risk customer. At the very least, your insurance company will likely have to adjust your payment schedule.
You might also lose your grace period in the future if you let the grace period expire. If you’ve used your grace period three months in a row, for example, then your company might put you on a stricter payment plan. Your grace period might be reduced or even eliminated.
Some Insurance Companies Offer New Car Grace Periods
You may be reading this article because you’re preparing to buy a new car and are concerned about a gap in your insurance coverage.
Is there a grace period for car insurance on new vehicles? Does your insurance company give you time to drive a new car home from the car lot while still being covered under your insurance policy?
Most insurance companies do offer a grace period when buying a new car. You can drive your new car home from the dealership while automatically being covered under your old plan. It’s similar to how your car insurance covers you when driving a rental vehicle.
Your grace period for a new vehicle can range from 2 weeks to 30 days. If you don’t notify the insurance company of your new vehicle purchase within that time frame, then you will be driving uninsured. The grace period is designed to allow you to purchase a vehicle during the insurance company’s non-business hours while still being insured. Call your insurance company as soon as possible to confirm you’re covered.
As always, don’t assume your insurance company offers a grace period on new cars. Check your policy or call your insurance agent to make sure.
If your insurer won’t cover your drive home from the dealership and the short time frame before you buy a new insurance policy. You can search for something called drive away insurance, which will cover your new car temporarily before you get a new policy in place.
Final Word on Insurance Company Grace Periods
A grace period is a last-resort measure for a policyholder to get back on their feet. Your insurance company doesn’t want to lose you as a customer, but they also can’t provide insurance for free. Most insurance companies offer some type of grace period – but don’t expect to rely on your grace period every month.