Insurance Blogs

It’s a several weeks until you receive a paycheck from work. You’re running a little short on cash this month, so you end up putting your car insurance bill in the “this will have to wait” pile. If you think you’re paying too much for insurance now, wait until you see the consequences of making an auto insurance late payment. Even if pay your bill one day late, your insurance company has the right to cancel your policy and remove you as a potential customer. Also, the company won’t always necessarily reinstate you once they get their overdue bill.

What you may not know about your policy?

Unlike most health and life insurance policies that give a grace period of 30 days, auto insurance doesn’t have a have such a policy incorporated in their system. Each state has its own set of rules governing when an insurance company may drop your policy if payment isn’t fully received based on the terms originally agreed upon.

In many cases insurers value your business and won’t drop you if you make an auto insurance late payment. However, if it becomes a habit throughout the course of the contractual agreement then they may take action and kick you off their coverage. Although state insurance regulators are able to resolve many complaints, they may fail to help someone who neglects to pay their premium in a timely manner.

Searching for new auto insurance after being canceled
When you apply for a new policy with a different insurance company, it will routinely check to see if you’ve been canceled for having an auto insurance late payment from a previous or former auto insurer. If this is the case, it may not insure you under a regular payment plan, even if you have a perfect driving record. Some solutions that auto insurers do to help customers that have payment problems are introduce an installment plan, consisting of one annual payment instead.

Make sure to tell the truth

When you apply for a policy with a different insurance company, you should always answer questions truthfully about why your previous policy was canceled and if you’ve ever made an auto insurance late payment. In several states, auto insurance companies have 60 days after it issues your policy to investigate whether you’ve disclosed the truth or not.