Reader question:
I missed my payment for my car insurance premium, and already I don’t have a stellar history. Should I panic?
Mark
Well, you should never panic.
That isn’t to say that missing a payment on your premium is a good thing. It can cause trouble, and like all missed payments, it’s best to be avoided. A late premium payment may mean policy cancellation, even if you’re only late by one day. Unlike home insurance companies, which tend to offer a 30 day grace period before cancelling insurance, car insurance companies have no such policy. Most are allowed by state law to cancel policies immediately if payment is not made, and many are pretty quick to the draw. If you want to know what is legal in your state, talk to your states department of insurance. Your state might provide a grace period.
Most insurers won’t just up and cancel your policy if you’re late one time. They want you as their customer, and unless you’re doing a number of other crazy, risky things, they’ll do what they can to keep you. Multiple late payments though will make you a higher risk customer, and if you have a problem with this you probably will have your policy canceled, and if you are able to reinstate at all you might have to pay your entire premium before you can do so.
One reason to avoid getting your policy canceled is that it can sometimes affect your credit score, which can in turn affect your ability to get a new policy. One way to avoid missing a payment is to sign up for automatic debit options, which many car insurance companies now offer.
Cheers,
Fashun Guadarrama