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Car Insurance Coverage
Updated May 17, 2021|4 min read
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Car insurance is essential financial protection for you and your vehicle. It can cover the costs of damage to other cars if you cause an accident, pay for your medical expenses, and pay to repair damage to your car. But unless your premium is paid for in full upfront, insurance payments must be made every month by the agreed-upon due date in order to secure financial protection for you and your car.
Late or missing car insurance payments can result in a lapse in coverage if left unaddressed. If an auto insurance provider is unable to process your payment, you may be charged a late fee of as much as $15 per day until your payment goes through.
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If you stop paying premiums altogether, your insurer may cancel your policy. It’s best to avoid any lapse in car insurance coverage, because lapses on your insured record can lead to higher premiums next time you apply for a policy.
A late or missing payment can result in a lapse in coverage, meaning you won't be protected
If you miss a payment, your auto insurance provider may charge you a late fee of as much as $15 per day until they are able to process it
If you stop paying for coverage altogether, your coverage will lapse and your insurance provider will cancel your policy
Most car insurance payments are withdrawn from your credit or debit card automatically and could be considered late if your provider is unable to process your payment. If you have insufficient funds, the card they have on file is expired, or you entered your billing information incorrectly and your card cannot be charged, your payment will not go through and could put you at risk for losing your coverage altogether. You may also be charged a late fee of as much as $15 per day until your payment goes through.
To avoid late payments, confirm you have the money in your card by the agreed-upon payment date so your insurance provider can easily process your payment. You may also be able to access your invoice online to view your payment history, or leave a backup card on file with your insurers which they can use if your first payment method doesn’t go through.
Late payments can result in a lapse in coverage which means you would lose protection for your vehicle, and driving without coverage would be illegal. If you get into an accident after your car insurance lapses, you’ll have to pay out of pocket for any damage you cause to yourself, others, and your car. You also risk any fines or fees that go along with driving uninsured in your state.
If you receive a cancellation notice from your insurance company, contact your provider, try to reinstate your policy with your current insurer, or shop around for a new policy, and avoid driving your car until you are no longer uninsured.
Payments are generally considered late the day after a due date, sometimes as soon as 12:01 A.M. A payment that is one or two days late could lead to a lapse in coverage, and eventually a total policy cancellation. Check with your insurer if you’re worried that you’ll have to make a late payment. Different car insurance companies may have different rules around late payments.
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Yes, many auto insurance companies offer a grace period between 10 and 25 days before canceling your policy for nonpayment. The exact length of your grace period will vary based on your home state, your provider, and the status of your account, but insurance companies are legally required to notify you before canceling your policy. If your policy is canceled, you will likely receive a notice via email or snail mail.
You should contact your carrier immediately after missing a payment to discuss next steps and make arrangements. If you know you won’t be able to afford your next payment before it’s due, talk to your insurance company about temporarily extending the due date or arranging a partial payment.
Your insurance provider can cancel your policy if you stop paying altogether. But many insurance companies will usually be willing to reinstate a policy that’s been canceled due to nonpayment if the coverage has lapsed for fewer than 30 days.
➞ Learn more about how to reinstate a canceled policy
The best way to avoid a lapse in coverage is to pay for your car insurance in full at the start of your policy. If you can’t pay your premium upfront, you should be able to negotiate a payment plan with your provider.
A payment plan can help you pay off your premium in monthly installments, but you may be charged a small service fee that covers the cost for processing it.
If you’re concerned about being able to make your payments, there are several ways to save money on car insurance.
Lower your coverage - Consider lowering your coverage limits — you may be paying for more coverage than you need. Raising your deductible amount can also lower your monthly premiums, but remember that you may actually need to pay it in the event of an accident
Shop around for new coverage - Compare quotes from different insurance companies to find the best coverage for the cheapest price. You may be able to pay less than you’re paying now. Many car insurance companies also offer discounts if you switch
Find discounts - Save money with driver discounts, vehicle discounts, and policy discounts. You may be eligible for a discount based on safe driving habits, owning a new vehicle, or for switching to paperless billing
Bundle policies - Try bundling multiple policies, such as home and auto, to qualify for a multi-policy discount
Whether or not you have a grace period depends on your individual insurance company. Providers that do give grace periods tend to allow around 10 days for you to pay after the payment due date. If you want to stick with your existing insurer, you can make a payment within the grace period to avoid a lapse in coverage.
Most insurance companies give you anywhere between 0 and 30 days to make a payment before they cancel your policy. Within that grace period, your insurer will reach out to you stating the final date of your coverage. You should contact your insurer and make a payment before the 30 days is up.
Applying for car insurance doesn’t affect your credit score, and paying your premium doesn’t help you build credit. However you may see a spike in your rates for non-payment, so you should still make your payments on time.
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