Late Payments Explainer

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Late car insurance payments are something you should place a high priority on avoiding.  Most auto insurers are very strict about on-time payments and can use an auto insurance late payment to either drastically increase your premiums or cancel your coverage altogether.  The good news is that most auto insurance payments are structured on a twice-yearly basis, so you’ll only have to remember to make a payment every six months.

Be Vigilant

If you’re paying your auto insurance on a monthly installment plan, you should be extra vigilant about making your payments on-time and should definitely consider setting some sort of auto-pay or direct-debit payment system with your insurer.  If you’re paying twice a year then make sure to set up reminders for yourself on whatever calendar system you use to stay organized.  Some insurers even often email alerts to keep you informed of when a payment might be coming due.

Grace Periods are Rare

Unlike health insurance, auto insurance usually does not offer you the luxury of a 30-day grace period for repayment.  A handful of states require some sort of grace period for auto insurance, but these are the exceptions, rather than the rule.  And unlike a consumer credit card company, a late payment is much more difficult to expunge from your record when dealing with an auto insurer.

Get Good Information Up Front

There’s no need to lose sleep over worrying what happens if you miss a payment: simply contact a customer service representative at your insurer and ask them to walk you through it. Questions to ask include:

  • Is there a grace period for repayment?
  • What are the consequences for a missed payment?  Rate increase? Penalty Fee?  Cancellation?
  • Can you contact the insurer and work out a payment schedule if you are unable to pay due to financial problems?
  • Does the insurer report a missed payment to credit agencies?

If You’re a Good Customer, Expect More Cooperation From the Insurer

If you accidentally missed a payment and have never been late before, oftentimes you’ll be able to work with the insurer to remedy the situation.  The insurer values your business, after all.  However, if you’ve had a late payment once or twice before, you might not receive such lenient treatment.  The solution, of course, is to consistently pay your auto insurance bill on time.  Again, taking advantage of a direct deposit or auto pay system is a great way to decrease your worry in this area.

Want to compare late payment policies among insurers?  Visit our quotes page to get started.