Auto insurance is an expense that everyone with a car must pay. In order to register and operate a vehicle, all people must maintain liability insurance on the car. The coverage must meet the minimum requirements for that state. Failure to maintain auto insurance can lead to denied claims, revoked driver’s licenses and even legal trouble.

Car insurance policies renew every six months or one year. In some cases, the insured will pay one bill at the renewal; in other cases, the insured will choose to pay monthly installments. Either way, a late payment can have disastrous consequences. If an insurance policy is not paid on time, the coverage may lapse. Any accidents that occur during the lapse would not be covered by the company, and the insured may have a difficult time renewing their policy after a cancellation.

Fortunately, most car insurance companies do have a grace period. As long as a payment is made within the grade period, the policy will be brought current and remain active. All auto insurance companies determine the grace period differently, so it’s a good idea to check with the specific company for details about how long the grace period is and whether there are any late fees assessed.

What Happens if I Don’t Pay My Bill?

If you miss a car insurance payment and do not pay it before the grace period is over, your auto insurance will be canceled. This cancellation will usually be effective as of the date the payment was due, not the last day of the grace period, although that does vary from one insurance company to the next. Any auto accident occurring in that time period would not be covered.

Whenever an accident is denied, the insurance company will issue an official denial letter. The insured must then pay for any damages they caused to another person’s vehicle or property out of pocket. This can lead to expensive lawsuits or the insured being sent to a collection’s agency. The insured must also pay for their own repairs after a claim has been denied, and a claims denial can sometimes make it more difficult to purchase a new auto policy in the future.

The auto insurance company will also advise the DMV about the lapsed policy. This means that the DMV may cancel your driver’s license until the policy has been reinstated and the insured has submitted an SR-22 form. Additionally, if you are caught driving during this period by a police officer, he can write a citation for failure to maintain auto insurance.

How Long is the Grace Period?

Different car insurance companies offer different grace periods. Most companies will provide between a week and a month’s worth of grace period, although it’s not unheard of for a company to provide a grace period of just one or two days. In nearly every case, if a policy payment is over one month late, the policy will be canceled.

If you call to file a claim during the time of the month when your premiums are due, the policy may initially appear canceled in the claims department’s computer system. This happens so that insurance companies will be sure to investigate the status of any policy that is near its cancellation date. Once the claim has been filed, the insurance company will assign a coverage investigator to verify that the policy is in fact up to date and that coverage can be afforded to the loss.

When the policy checks out as being active, the insurance company will upload coverage and proceed with the claim as normal. In most cases, the coverage investigation process will take no more than a few days and should not interrupt the claim unless the policy is found to be inactive.

It’s always a good idea to maintain records of your auto insurance payments. If you pay by an automatic bank draft, make sure that the payment is being withdrawn from the bank account each month and check the website to ensure that the payment is coming up as complete. It’s also a good idea to check the company website to ensure that payments have been received by check or credit card. Keep receipts and account statements. This way, if there are any problems on the company’s end, you’ll have the paperwork necessary to reinstate the policy.