If I Miss A Payment Will My Auto Insurance Be Cancelled?

If you miss a monthly, quarterly, or bi-annual payment on your car insurance, what happens to your policy? Are you covered during the time the policy was unpaid? If you make the payment quickly, is your coverage reinstated? These are all questions people ask from time to time, if they have missed a car insurance payment by accident or due to unforeseen circumstances.

The answers will depend on the state in which you live, but generally speaking you do not lose your car insurance the day you miss a payment. Most states have laws which require insurance companies to offer a minimum “grace period” for your payment to arrive. An average grace period is ten days, although your grace period may be longer or shorter. If your payment does not arrive by midnight on the due date, you are considered to be in the grace period on your policy.

Once you enter the grace period, if you make your payment, everything goes back to normal, just as if you had made your payment on time. Most states will not allow insurance companies to punish customers for being a day or two late on their payments; in fact, you may have even longer than the grace period to get your payment in, depending on your state.

After the grace period expires, many states send out a “delinquent notice.” This still does not mean that your insurance in cancelled; rather, it means that you have a deadline to get your payment in. Some companies and some states do not have delinquent periods following the grace period; be sure to check with your insurer to find out. Delinquent periods can be as long as thirty days, but may be as short as five. In any case, once the delinquent period ends, your coverage will most likely be cancelled. This leaves you liable for any injuries or damage caused while you are uninsured.

While being uninsured is a terrible worry, you also have other problems if your insurance coverage is cancelled. When you obtain a policy, you are not the only one bound by the terms of the agreement; the company is also “on the hook.” Even if you speed or have an accident, your company must continue to insure you for the full coverage period agreed upon. If your insurance is cancelled, however, the company is not obligated to take you back. If you have a spotty driving record, this can present a problem in finding other insurance at a reasonable rate.

Even if you have a clean record, your company does not have to take you back if you miss payments. If the company feels that they will always be chasing you to pay them, it is very possible they will refuse to reinstate your policy after a cancellation. This means that you will have to search for new coverage, and will lose any customer loyalty or long-term discounts you may have had with your old company.

If the company chooses to reinstate you, they can, in many states, insist on a more structured payment plan.
For example, if you miss a bi-annual payment, your company may insist on quarterly or monthly payments. In many cases, this causes you to lose discounts associated with a “paid in full” policy. You may end up paying more in processing and handling fees with monthly payments, as well.

It is always wise to make your payments on time whenever possible. Even if you can only pay half of the premium, the company will often give you thirty days to get the other half; many companies offer this service to their regular customers, and do not consider it to be a “non-payment.” Talk to your agent or your company to find out options if you are having trouble making your payments.

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