Maybe you forgot to pay your car insurance. Maybe you just need a few more days until your paycheck arrives. Whatever the reason may be, your car insurance payment is late – and you’re worried about the consequences.
What happens if you’re late with your car insurance payment? Will you lose insurance coverage if you’re a few days late on your payment? Today, we’re answering all your questions about late car insurance payments.
You’ll Probably Just Have to Pay a Fee
In the vast majority of cases, your car insurance company will not cancel your car insurance plan the moment you miss a payment.
Instead, most insurance providers will simply charge a late fee. You might pay $10 to $20 more for this month’s late payment, for example, than you normally would. This fee might be billed to you separately. Or, it could be added onto your next insurance payment. However, your insurance company should always provide some type of notice about this penalty.
Your insurance company will likely forgive your late payment if this is the first time you’ve been late. However, they’re less likely to be forgiving if you’ve done this before. If you’re repeatedly late with your car insurance, for example, then you could start running into stiffer penalties. Your insurance company could even cancel your policy.
Will My Insurance Company Cancel My Policy?
Typically, your insurance company will not cancel your insurance policy if you’re a few days late on your insurance payment – especially if this is only your first or second time missing a payment.
However, if this becomes a habit, and you continue missing payments, then your insurance company might choose to cancel your policy.
Furthermore, if your insurance payment is late by more than a few days – like a week, two weeks, or longer, then the insurance company may choose to terminate your contract.
Finally, if you’re on a short-term insurance contract – like a 60 day or 120 plan, then the insurance company might cancel your policy immediately when you miss a payment. They’re less likely to cancel your plan immediately if you’re on a 6 month or 12 month plan.
Insurance Companies Might Not Provide Coverage If You’re Involved in an Accident After You Miss a Payment
Some drivers have difficulty filing a claim with their insurance company when they get into an accident after missing a payment.
The insurance company officially still provides coverage. However, if you’ve gone a while without paying, then the insurance company might not have to legally honor its commitment. You might be forced to pay out of pocket for any damages related to your claim or an accident.
Most Importantly, Check your Policy
Above all, the most important thing to do is to check your insurance policy. Your insurance policy will have a set of terms and conditions explaining how missed payments work. You’ll see the penalties for missing a payment, the length of time you have to file a payment, and any extra fees you may be assessed.
Any Other Penalties for Missing an Insurance Payment?
There may be all sorts of different penalties and repercussions for missing an insurance payment – even if you make the payment a few days later and everything seems fine.
The first and most important penalty is that the insurance company might avoid renewing your policy. That means when your policy comes to an end after 6 months or 12 months, it won’t be automatically renewed. You might not have the option to renew it. Or, the insurance company might significantly raise your rates.
Drivers who frequently miss insurance payments have proven themselves to be risky drivers in the eyes of the insurance company. This could raise your rates across all insurance companies.
Your credit score might also suffer as a result of your missed insurance payment. Remember: your credit score is a rating of your riskiness as a borrower. When you have a monthly insurance premium, you’re effectively borrowing money from your insurance company. By missing a payment, you’ve proven to be a risky borrower of money.
Ultimately, if this is your first time missing a car insurance payment and you’re just a few days late, then it’s probably not a big deal. Check your policy to make sure. If you frequently miss payments, however, then your insurance company might avoid paying a claim. They could even cancel your policy.
One of the best ways to avoid missing a car insurance payment is to compare car insurance quotes from different companies to get a cheaper insurance plan. If you find yourself frequently missing insurance payments due to lack of funds, then you’re putting yourself at significant financial risk. You have a car insurance policy that you cannot afford. In that case, take a few minutes to compare car insurance quotes online. Find a quote that fits better into your monthly budget.