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While there may have been nothing you could have done to pay your bill on time, if it does happen, you should contact your insurance provider as soon as possible. Missing a payment can have a serious impact on your insurance coverage for the short and long term, particularly if you’ve missed payments in the past or have a bad driving record. Car accidents can cause costly damages to vehicles, property and people, so it’s important to keep your car insurance in good standing so that you can access affordable and suitable coverage for years to come.
Notification of Missed Payment
Although laws regarding car insurance may differ from state to state, most providers will notify you if you’ve missed your car insurance payment. Depending on the company your policy is with, some providers will notify you both by phone and in writing, however, you should refer to your insurance policy to see what their standard practice is. Ultimately, it is always up to the customer to make sure their payment is on time and that their account is in good standing.
Some insurance providers might send out an overdue notice, telling you that your car insurance payment didn’t arrive or that it did not go through, and that you have a certain amount of time to make the payment. If the payment is made within the stated timeframe, your account may remain in good standing and your insurance coverage will likely continue uninterrupted, but this will likely depend on whether you’ve been late making payments in the past. In addition, some companies will charge a late fee for any payment that arrives past the original due date.
If you have been with the same insurance provider for some time, and you have a clean driver’s record and have always made your payments on time, the company may even agree to extend your due date to reward your business. They could grant you a few extra days or weeks to pay your bill and maintain your current coverage, depending on the circumstances. You will have to contact your insurance provider to inquire about such an arrangement; however, as the company is under no obligation to postpone your payment date.
If after receiving and reviewing an overdue notice, you remain unsure as to what your status is with your insurance provider, you should call them immediately to get more information.
Cancellation of Insurance
Unlike some other services or utility companies, which may allow an account to miss several payments before cancellation, most car insurance providers can cancel your policy not long after your bill is overdue. Although most companies won’t do so after one missed payment, particularly if you’ve been a reliable customer and driver, your insurance could be cancelled if you do not contact your provider and payment isn’t sent after you’ve been notified.
Depending on what state you live in, your insurance provider may be legally bound to give you a grace period before it can cancel your car insurance. Typically, they are also legally required to notify you in advance of a pending cancellation, and this could vary in time depending on the law in your state.
For example, in the State of Washington, insurance companies are required by law to give a customer a minimum of 10 days notice, if their policy is being cancelled due to nonpayment. You can find out more about the law regarding car insurance and cancellation policies in your state by referring to this website, the National Association of Insurance Commissioners.
It’s important to remember that the due date means your insurance provider must have the payment on that date; it does not mean that your payment has been sent prior to or on the stated deadline. In other words, make sure you take into account how long your payment will take to arrive if you’re mailing it, or contact your provider to see what other, faster, payment options are available.
If your provider does not have the funds on the date mentioned, your insurance will likely be cancelled and you will be left with an uninsured car.
Lapse in Coverage
If your car insurance is cancelled due to non-payment, and you have not secured a new policy for your vehicle, then there will be a lapse in your insurance coverage. While some people require their own car to get through their day-to-day responsibilities, driving an uninsured car is not only illegal it could have far reaching legal and financial implications.
Penalties for driving an uninsured vehicle vary from state to state, however, typically a driver will have their license suspended and they will have to pay a substantial fine if they’re caught operating a car that’s not insured. For example, in the State of Delaware, first time offenders will have their license suspended for six months and they will be fined no less than $1,500. Additional convictions for driving an uninsured car, which occur within three years of a previous offense, result in a $3,000 penalty.
It’s important to remember that in most states, insurance providers are required by law to notify the department of motor vehicles of any cancelled insurance policies, so that local authorities can access people’s licensing information at anytime. In other words, motorists can be caught for driving an uninsured vehicle without being involved in an accident or traffic incident.
In addition, car accidents can cause thousands of dollars in vehicle repairs, property damage and medical bills, which could ruin someone financially if they do not have the necessary insurance to cover them. If you’re found legally responsible for causing an accident, and don’t have car insurance, the victims involved could take you to court in an effort to garnish your wages or seize your property as a means to cover their damages.
Even if you don’t drive your car after your insurance lapses, and thus, aren’t pulled over by local law enforcement and aren’t involved in a car accident, many states charge a fine for every day your car is uninsured. For example, the State of New York charges $8 daily, for day one through 30, after your car insurance lapses. For day 31 through 60, the fine increases to $10 per day.
If you don’t plan on driving a vehicle, and thus, you don’t need it to be insured, you must notify your local DMV before your car insurance lapses. Depending on where you live, you may be required to do other things, like for example, surrender your license plates.
If you realize that your car insurance has lapsed, contact your provider immediately to see what steps you can take to have your insurance reinstated.
If you have a clean driving record and have consistently paid your premiums on time in the past, some companies will reinstate your insurance provided it hasn’t been long since your policy was cancelled and you’ve paid your premium. If it’s been a while and your insurance track record is not good, then you likely will be forced to find a new provider.
Most drivers who have had their insurance policies cancelled or allowed their insurance coverage to lapse will face higher premiums in the future. People who have had this happen may be considered a high-risk driver by insurance companies, and as a result, they may even have difficulties securing a new insurance policy depending on their situation and driving record.
While all states mandate that drivers can purchase a policy from some provider, which at least meets the state’s minimum insurance requirements, high-risk drivers typically pay extremely high premiums for the coverage.
Drivers in this category may be able to secure lower insurance rates over time, provided they pay their premiums when required and maintain a clean driving record. The additional costs they incur because of previous incidents, however, could end up being quite substantial while they work to establish a more reliable driving profile.
Maintain Your Credit Rating
In addition to the higher insurance rates, penalties and fines you might incur as result of missing your car insurance payments, your credit rating could be affected negatively. Particularly if you’ve had your insurance cancelled due to non-payment, your credit rating could be lowered, and subsequently you could have difficulties taking out affordable loans and lines of credit for other items and property in the future.
Similar to demonstrating that you are not a high-risk driver, it could take quite a significant amount of time to improve your credit rating, if it is significantly lowered due to missing your car insurance payments. Therefore, it is in your best interest to always try to keep your payments current.
Assess Your Situation
If you or someone you know has been late making their car insurance payment, it’s important to review your provider’s policies as soon as possible, so that you can take steps immediately to ensure your insurance isn’t cancelled. While the onus may be on you to make sure your bills are paid on time, if you’ve been a loyal and reliable customer for several years, you may want to assess how your provider treats you if indeed you’re late making a payment just once.
If the company gives you little to no breaks in terms of a grace period or keeping your insurance rates affordable, you may want to explore what other providers are offering.
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