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Consequences of Late Auto Insurance Payments

The consequences of late auto insurance payments are crystal clear to some policy holders. But for others, those results are less clear. Many drivers across the country have from time to time experienced circumstances in their lives that forced them to make choices on which bills to pay and which ones to fall behind on. If there isn't enough money to pay for it all, there's not much else you can do. The trouble with choosing your auto insurance bill for the "wait till later" pile is that the consequence of late payment can be staggering. The more you know about this, the more likely you will be to try to find a way to keep up with your premium payments even when money is tight.

Every Late Payment Has Consequences

If you're a week away from payday and all kinds of bills are coming due, you have some tough choices to make. But if at all possible, try to get that car insurance payment out on time. Even if it arrives at the insurance provider one day late, there could be steep consequences. According to the terms of standard auto insurance agreements, that insurance provider has the right to cancel you as a customer. Many drivers who have ever seen their checks cross in the mail with late payment cancellation notices can attest to that.

What's even scarier for many of us who live paycheck to paycheck is the fact that your auto insurance provider is not required to reinstate you once they receive your late payment. And on top of all of that, if your provider has chosen to cancel you or suspend your coverage as a result of a late payment or multiple late payments, you may very well end up paying much more for the same coverage with another company, if you can find a policy at all. Some drivers have even been driven to high risk policies simply because of their payment history, even if they have perfect driving records. Your credit has a huge bearing on your rates, and your payment history as a car insurance consumer has a huge bearing on your credit.

The laws governing auto insurance will, of course, vary depending on the state you live in, but an auto insurance provider can in most cases drop you as a customer for nonpayment, even if it is only a one time occurrence and your check arrived only a day or two late. That means just getting that check out in the mail by the due date, or getting it postmarked by the due date is not good enough. Your provider must receive the payment by the date it is due or you may be subject to cancellation under the terms of your contractual agreement.

 

Insurance Cancellation a Last Resort

Of course, it has to be pointed out that most auto insurance companies are not exactly chomping at the bit to cancel customers. The last thing they want is to lose that source of income. What they want is for you to uphold your end of the bargain in exchange for the protection they provide. For this reason, most providers will not drop a customer who is just a few days late with a payment. In fact, some companies will just wipe the slate clean and act as if nothing happened, especially with a long time customer who only slipped up this one time.

 

But if you are habitually late with your payments, your auto insurance company might take advantage of the chance to kick you off of their rolls of insured customers. If you are constantly behind on your payments, you become a much greater risk to insure than even your driving record suggests, because the company has to be constantly wondering whether they will even get paid for the services they are providing to you as their customer. If you get past the period of a few days and have hit the cancellation date, they may have no other choice but to cancel you. Alternately, some insurers will ask drivers who have been habitually late to pay for any remaining premiums for the rest of the policy period before they will reinstate them as covered motorists.

No Car Insurance Grace Period

Many motorists make the mistaken assumption that there is a grace period built in to auto insurance. This is simply not the case. Imagine getting into a car accident with your premiums unpaid. Should your insurer provide a service you have not paid for? With auto coverage there is usually no state mandated grace period, so you have to be careful when you get behind on these payments. The consequences of late auto insurance payments can be steep, starting with auto policy cancellation.

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