A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 19, 2021

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Here's what you need to know...

  • Auto insurance is a product that is paid in advance before coverage is provided
  • If you fail to pay your premiums by the due date or before the grace period is up, your coverage will lapse for non-payment and claims filed during this period won’t be covered
  • If you pay monthly, your premiums are due on the same day of the month every month
  • Customers who pay their full premiums at once will receive a new billing statement along with their renewal around 30 days before the policy is up for expiration
  • Some insurance companies now offer email options where they will notify their clients via email rather than mail to save money and to save trees

Auto insurance isn’t just something that you should carry, it’s something that you’re obligated to when you own a vehicle. While it can be pricey to maintain your coverage, allowing it to lapse can cost a lot more than those annual premiums that you’re paying for protection. Before you compare insurance, you need to know when your premiums are due. Compare car insurance rates now by using our FREE tool above!

Since your policy only stays active when you pay your premiums on time, it’s important that you keep track of your due dates and your insurance terms. While it can help to memorize the dates on the calendar that your payments are due, that’s not always realistic. Here are some ways that you are reminded of your payment due dates.

How do auto insurance billing cycles work?

Understanding the billing cycle for auto insurance products is important as you are preparing to pay your bills. Some of your service providers might not bill you until after you use the account, but in the world of insurance you’re billed for the coverage before it is even afforded.

Since you pay in advance for coverage, the consequence for missing payments is a policy cancellation.

This is why it’s so important to pay on-time or you could easily have a lapse in coverage for overlooking your due date. Lapses may not seem to be a big deal to you, but they come with serious consequences that come with stiff penalties.

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When is your first payment for insurance due?

When you’re comparing the cost of auto insurance, you receive non-binding auto insurance quotes. These quotes are just estimates that show you how much you’re likely to pay if you buy insurance through a specific carrier. It’s not until you decide to apply for your policy that you really have coverage.

When you’re starting a policy, the first payment is due at the inception of the policy. You have the option to pay for coverage that starts on a future date, but your payment is due on the day that the coverage takes effect. If you don’t make a payment, the coverage is not bound and claims that you present won’t be covered.

Paying in Full vs. Paying Installments

In the past, all policyholders were expected to pay premiums in full for coverage. Today, most insurance companies that are still in business allow you to set up a payment plan where you can essentially pay-as-you-go. While paying in full is still a popular option, many people find it easier to manage payments when they pay in installments.

How you are notified of future payment due dates depends on the payment schedule that you select.

When paying in full, you’ll receive a lot less mail and paperwork from the company. Here are some of the payment plan options that are frequently available through the leading companies:

  • Monthly
  • Electronic Funds Transfer Monthly
  • Quarterly
  • Bi-annually
  • Paid-in-full with automatic renewal

Do you get notices when you have an installment approaching?

If you decide that it makes the most financial sense to pay installments, your company will send you an invoice at least 10 to 15 days before the payment is due. The frequency of your installments is dependent on the payment schedule that you select.

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Can you request emails instead of paper billing?

If you decide to cancel paper billing, the company may send you an email reminder instead of a physical bill. Email reminders are most common when you have an automatic draft set up that comes out of your account each month. One of the major advantages of email notifications is not just that it’s a green option, it’s also an option where you can save around $5 per bill.

What happens when your auto insurance renewal is due?

Whether you pay in full or you decide on installments, your policy will eventually come up for renewal. Renewals occur either 6 months or 12 months after your policy takes effect depending on the length of your term. This is when the insurance company has the right to underwrite risk again and change your premiums.

Since your premiums can change at renewal, all states make renewal notifications mandatory.

In fact, you must be notified of your new renewal rates at least 30 days before your expiration in most states. This 30-day requirement gives you time to shop around so that you can find the best deal in a highly competitive marketplace.

What happens if I forget to pay my premiums?

If you forget to pay something like a cable bill, your service might be shut off and you can’t watch TV until you make the payment. While that’s essentially what happens when you forget to pay your insurance, you lose more than just your favorite programming. You lose a great deal of protection. Here are some of the consequences when you don’t pay:

  • You can be cited for no insurance
  • You will pay a fine and a penalty after appearing in court
  • Your registration or license could be suspended
  • You will have a misdemeanor on your record that can affect insurance rates
  • You could be penalized by lender for not having insurance
  • You may have to do community service
  • You could lose your vehicle to impound
  • Your rates for insurance could go up because you are considered a high-risk
  • You could be arrested and sentenced to jail

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Will I really save money if I pay my policy in full?

The most effective way to avoid a non-payment lapse is to pay in full at the beginning of the term. Doing this ensures that you won’t have mid-term lapses. You will also get a discount of between 10 and 15% of the premiums for paying in full with many carriers.

If you are ever confused about your due dates, you should contact your insurer immediately, because it’s better to be safe than sorry.

After verifying that you have coverage, you can easily price shop the cost for coverage elsewhere by using an online quote tool. Enter your information and get instant quotes so that you can save every month or year. Enter your zip code in our FREE tool below to compare car insurance rates now!