What Is a Car Insurance Grace Period?
A car insurance grace period allows drivers to maintain their coverage even if they miss a monthly payment.
Written by Andrea Barrett
Reviewed by Hillary Kobayashi
Table of Contents
- What is a grace period?
- Do insurance companies offer grace periods?
- How does a car insurance grace period work?
- What happens if you miss a car insurance payment?
- Penalties for a car insurance lapse
- What to do if you have a lapse in your car insurance policy
- FAQs
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A
car insurance
grace period allows you to keep your coverage even if you miss a monthly payment. It goes into effect if you don’t pay your car insurance premium on time. The option of a grace period, as well as the length, varies by provider.Paying your car insurance premium on time is important to ensure your coverage stays active—but what if you forget to make a payment? Or what if you couldn’t afford to? Most insurance companies offer a grace period—or a specific amount of time a policyholder has after the payment due date to complete the payment—before they cancel a policy.
If you’ve been on the verge of missing a payment and are worried you’ll lose your coverage, we have all the information you need to know about car insurance grace periods. We’ll cover what they are, how they work, the consequences of an insurance lapse, and what to do if your insurance lapses.
What is a grace period?
If you miss a car insurance payment, your policy won’t automatically be canceled. This is thanks to a grace period—the time you have to pay your premium after its due date before you experience a lapse in car insurance coverage. This period allows policyholders to play catch up on whatever caused them to miss a payment due date.
Most insurers offer a three to 30-day grace period, but it varies among companies.
Do insurance companies offer grace periods?
Most insurance providers offer a grace period, but not all of them do.
If your insurance provider does offer a grace period, your policy details will clearly state the length and any penalties for being late on a payment. The average grace period for most insurance companies is 10 days from the original payment due date, but this depends on the provider.
However, your insurance provider must legally provide a notice of cancellation before they can cancel your policy due to nonpayment. This notice will outline your last date of coverage unless your payment is received by that date.
Here are a few examples of grace periods from different providers:
Provider | Grace period |
|---|---|
Payment will rollover to next month with an added late payment fee | |
8 to 10 days | |
5 days | |
3 to 5 days | |
10 days | |
15 days |
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How does a car insurance grace period work?
The grace period for car insurance offers you additional time to complete your missed payment without having your policy canceled. As long as you make the full payment before the grace period ends, your policy won’t lapse.
Grace periods are pretty straightforward: If you miss a payment, you will most likely be notified by your insurance provider by email, phone, or mail (or a combination of the three). This notification should also explain the grace period terms and how much time you have before your coverage lapses.
Making a payment during the grace period is no different from making a regular payment. Generally, these payments can be made online, by phone, or by mail. However, some insurance providers may require you to pay a late fee for missing a payment, while others may waive the penalty if this is your first missed payment.
Key takeaway Making a payment during a grace period is the same as making any other payment, and it won’t change your payment schedule. However, you may be subject to a late fee.
What happens if you miss a car insurance payment?
Missing a car insurance payment is never ideal, but it happens. The biggest consequence of missing a car insurance payment is having your auto insurance policy canceled, but that’s not always the result.
Grace periods exist to help policyholders make their payments without having their policy canceled or coverage lapse.
However, not all insurance providers offer a grace period, and if yours doesn’t, you risk having your policy canceled and not having coverage if you
file an insurance claim
. Additionally, even if you do have a grace period, if you miss the grace period payment deadline, you won’t have coverage, and you’ll be on the hook for damages if you’re involved in an accident. If you think you will miss a car insurance payment, notify your insurance provider immediately. They might be able to set up a payment plan or allow you to make partial payments to avoid a lapse.
If you struggle to remember to make your payments, set up automatic payments or set a reminder on your phone to help you out!
Penalties for a car insurance lapse
Car insurance is a legal requirement in all states, and operating a motor vehicle without coverage is a severe offense. For anyone that’s missed an insurance payment or the grace period deadline, it can quickly lead to a car insurance lapse—which is a period where you own a car but don’t have insurance coverage.
Although it may not seem like a big deal, it is. Why? A car insurance lapse is bad news for insurers because it puts you in the high-risk category to insure. If you operate a motor vehicle without the appropriate insurance coverage, consequences can include:
- Fines
- Jail time
- Legal consequences
- Driver’slicense suspension
- Vehicle registrationsuspension
- Vehicle impoundment
- Community service
While insurance lapses happen for a variety of reasons, the fact remains that it’s a big red flag for insurers. Whether you forgot to make your payment, sold your car, or missed the grace period deadline, it can all result in a coverage lapse.
Apart from the consequences mentioned above for
driving without car insurance
, a coverage lapse will lead to a steep increase in your car insurance rates. Most insurers are wary about insuring a high-risk driver
, so finding a new policy could prove difficult. If this is your first coverage lapse and you have a
clean driving record
with no previous claims, your car insurance company may reinstate your insurance policy for a fee. To avoid the hassle and financial consequences, set reminders to make your payments to avoid a lapse in coverage! What to do if you have a lapse in your car insurance policy
If you’re in the unfortunate position of having your car insurance coverage lapse, don’t panic—follow these steps:
Call your insurance provider
First, you’ll need to call your insurance agent and make sure you have all the information. Ask if your coverage has lapsed and, if so, how long you’ve been without coverage.
If you’ve recently missed a payment and you’re not sure if they offer a grace period, there’s a chance your policy may still be active.
Ask about reinstating your policy
If your car insurance policy hasn’t been canceled yet, you’re in the clear. But if it has been canceled, call and ask if you can
renew your car insurance policy
to maintain continuous insurance
coverage with the policy you had previously. If you can have your policy reinstated, you can pay the remaining balance and avoid a lapse in coverage.
If your policy can't be reinstated, get a new one
If your policy has lapsed and your insurer cannot reinstate it, you’ll need to find a new insurance policy immediately, as state laws require all drivers to carry the appropriate amount of car insurance (and
proof of insurance
). However, starting a new policy after a coverage lapse can be expensive and will most likely increase your auto insurance rates, as you will likely be considered a high-risk driver. Most providers will start coverage immediately if you can find the right policy. Since your rates will go up, it’s a good idea to
shop around for quotes
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FAQs
How many days can you be late on your car insurance payment?
The grace period for car insurance depends on the provider. Most insurers will offer a grace period of 24 hours to 30 days, but call your provider or look at your policy to confirm. After this period, it’s considered nonpayment, and you risk having your policy canceled.
Do you still have car insurance coverage during your grace period?
Yes—the grace period allows policyholders to complete their payment without being penalized, so your car insurance policy will remain active. However, if the payment isn’t made within the grace period, your policy will be canceled, and you will not have insurance coverage.
