What happens after a late car insurance payment?

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Here's what you need to know...

  • Do not make late car insurance payments
  • Your insurance company may cancel your policy without you realizing it
  • Once the DMV is aware of non-payment, they can suspend or revoke your license
  • Late payments can also affect your credit score

You do not want to play around with a late car insurance payment. Consequences of a late car insurance payment include late fees, cancellation of your policy, or possibly higher rates without you realizing it until it is too late!

You may pay your car insurance late thinking everything is okay, but the truth is that your insurance company may cancel your policy without you realizing it.

Then you might get in an accident or get pulled over by the police, think you have car insurance, and find out instead that the cancellation letter crossed with your payment in the mail and you are no longer covered.

Paying your car insurance late can have life-changing consequences. Read the article below to learn why it is so important to pay your car insurance on time, what can happen if you do not, and helpful hints on how to stay current with your policy.

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What kind of late fees can my insurance company charge me?

An insurance company usually charges you after a set grace period of either five or ten days. However, some insurance companies do not allow for a grace period, so it is always best to contact your insurance company if you think you might be late with a payment.

Insurance companies are governed by the state, so if the state does not enforce a grace period, the insurance carrier does not have to offer one.

If your insurance company charges a late fee, it is probably around $10.

But it is not the late fee that should concern you. The fees that should concern you are the ones that the state issues when your driver’s license is revoked or suspended. Once you fail to pay your insurance, the insurance company is required by law to notify the Department of Motor Vehicles.

Once the DMV is aware of non-payment, they can suspend or revoke your license.

The expense of reinstating your license is costly. Some states charge a per diem rate of anywhere between eight and twelve dollars. Other states charge $200 and up for reinstatement.

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Why is it so bad to have my policy canceled?

When you try to obtain new insurance after a cancellation, you will run into difficulties. One of the questions the new agency will ask is if you have had any cancellations on your automobile insurance.

Whether you answer honestly or not, the agency will be able to see your cancellations when they pull your records. Having experienced a cancellation due to non-payment, your insurance rates will be higher.

You can expect to pay anywhere between 20 and 50 percent higher premiums than before your insurance was canceled.

You may also have difficulty finding an agency willing to cover you because you are now considered a risk.

Of course, if you get pulled over or are involved in an accident and your insurance policy is no longer active, you can be in severe trouble. Not only will you receive a ticket for driving without coverage, you may also have to appear in court or go to jail.

In addition to these consequences, if you get in an accident and your policy has lapsed, the insurance company will not cover any of the damages. You will now have to pay for all of the damages out of pocket, which can be extremely expensive.

Will a cancellation affect my credit score?

A cancellation will affect your credit score. An insurance company can notify the credit agency of non-payment immediately. Then your credit rating will be affected. Insurance carriers pull your credit score to determine the cost of insurance premiums.

A poor credit score will result in higher insurance premiums or denial of coverage.

What are the best ways to avoid a late payment?

The best ways to avoid a late payment or cancellation is to make paying your automobile insurance a priority. Establish online payments or automatic withdrawals from your checking account. If you must send your payment through the mail, be sure to allow extra time.

Figure out the best way to pay your premiums so that you cannot forget: whether it is monthly, semi-annually, or annually.

Remember that when the policy says it is due on the 15th, it is due by 12:01 AM on the 15th.

Play it safe and make sure the payment is made on the 14th.

Communication is essential in maintaining a good relationship with your insurance company. Discuss payment options with them to ensure your coverage remains active.

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