Car Insurance Lapse Grace Period
Most insurance providers offer a grace period between 24 hours and 30 days before you enter an insurance lapse. Here’s what to know.
Written by Jaya Anandjit
Reviewed by Bellina Gaskey
Table of Contents
- Is there a grace period after my car insurance lapses?
- What is a car insurance lapse grace period?
- What will happen if my car insurance policy lapses?
- What should I do if my car insurance policy lapses?
- What are the penalties for an expired insurance policy?
- How much does it cost to reinstate a lapsed car insurance policy?
- How to avoid a car insurance lapse
- FAQs
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Car insurance lapses aren’t uncommon, especially if your automated payments fail to go through or you lose track of your payment date. Luckily, most providers offer a grace period for payments, which can save you from a higher rate or a spot on your driving record.
If you recently missed a payment on your
car insurance
plan, don’t freak out. Car insurance lapses are pretty common and sometimes due to complete mistakes, which is why most providers offer a payment grace period. Perhaps you forgot your insurance billing date or your financial situation prevented you from proceeding with the payment. No matter the cause of your missed payment, a car insurance lapse can negatively impact your rate, driving record, and even your legal standing if you fail to make up the payment within the applicable grace period.
To prevent an increased rate, a dent in your driving record, and the risk of having your policy canceled, here’s a quick guide to handling a missed payment during your grace period before your insurance lapses.
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4.7/5 rating on the App Store | Trusted by 5+ million customers and 7 million cars4.7/5 app rating | Trusted by 5M+ driversIs there a grace period after my car insurance lapses?
Yes. Most insurance companies offer a grace period of up to 30 days, but depending on your provider, it could be as short as 24 hours.
If you fail to make a payment for your car insurance plan, your provider will notify you by email, phone, or mail, and they will include the range of your grace period. It’s crucial that you pay your premium before the grace period is up to ensure you aren’t met with a canceled plan, a notch on your driving record, an increased rate, or other legal and financial consequences.
What is a car insurance lapse grace period?
If you miss a payment for your car insurance, a grace period gives you a second chance before you enter a lapse in coverage. Your policy will remain active throughout the grace period.
As long as you pay your premium in full before the grace period is over, you will not experience a cancellation or the risk of non-renewal.
How it works
So, how exactly do you go about avoiding a car insurance lapse if you miss a payment?
If you fail to make a car insurance payment, your insurance company will contact you via email, snail mail, or phone. You’ll be notified of your missed payment, and you’ll also receive a grace period that typically ranges from 7-30 days.
You can make your late payment the same way you make a regular payment, although you may incur a late fee. Usually, companies waive the late fee if it’s your first time missing a payment.
Also note that even if you pay your premium late, your payment schedule will remain the same. This could result in being charged two installments in one month.
What will happen if my car insurance policy lapses?
If your car insurance policy lapses, your policy could be automatically canceled. If this happens, you can try to reinstate your policy or you may have to purchase a new policy.
Additionally, a car insurance lapse will appear on your driving record and you will be regarded as a high-risk driver for insurance purposes, which will result in a rate hike for your reinstated or new policy.
What should I do if my car insurance policy lapses?
If your car insurance policy lapses, make sure to contact your insurance provider immediately. Figure out the issue that led to a missed payment, and explain why you couldn’t make the payment on time.
In many cases, providers are willing to reinstate your policy if it hasn’t been long since the lapse occurred. But if you’ve surpassed your grace period, you could face some difficulties re-insuring your vehicle.
If your provider declines your reinstatement request, you should begin looking for a company that will grant you insurance as soon as possible. Shop around with at least three providers, and be aware that your rates will look higher no matter where you go due to your late payment history. Once you find a provider and policy that works, you can legally get back on the road.
What are the penalties for an expired insurance policy?
An expired insurance policy can negatively impact you in many ways, but first and foremost, it will affect your driving record and lead to increased insurance rates.
Once your policy lapses, your driving record will show that you’ve missed payments that resulted in a canceled policy. For insurance companies, missed payments are considered risky behavior, so while you may catch a break if it’s your first late or missed payment, you certainly will feel the impact of more than one—especially when it comes to your rate.
Car insurance rates can go up by as much as 25% if you have a history of late or missed payments, so if your plan seemed expensive to begin with, this will surely take a financial toll.
If your car insurance lapses but you continue driving with an expired policy, you could face legal and financial consequences.
Uninsured drivers can be fined up to $5,000 in some states for operating a vehicle without insurance, and you could also lose your license, have your car impounded, or even face jail time for frequent offenses.
Along the lines of financial consequences, if you happen to get into an accident without valid car insurance, you will need to stomach the costs of
car repairs
and medical bills on your own.Lastly, if you financed your vehicle and you lapse your coverage on said financed vehicle, you may be in breach of your contract with your
lienholder
. If this happens, you could face financial and legal consequences for breaking the guidelines of your loan contract.How much does it cost to reinstate a lapsed car insurance policy?
If your policy was canceled due to a coverage lapse, you can contact your provider and attempt to reinstate the policy. If your provider agrees to reinstate your insurance, you’ll need to pay your missed payment, any fees incurred from a late/missed payment, and possibly a reinstatement fee depending on the company.
You will also face a rate increase for your premium going forward due to the lapse in coverage.
How to avoid a car insurance lapse
Car insurance lapses can cause financial strain for years to come—so you’ll want to do whatever you can to avoid one. To lower your risk of a car insurance lapse, follow these simple guidelines:
- Pay your premium on time: Failure to pay monthly installments is the leading reason for car insurance policy cancellations. To avoid late or missed payments, you can automate payments or pay your car insurance in full once a year.
- Drive safely: Tokeep a clean driving recordand a low rate, practice safe driving at all times and avoid risks that could result in a recorded incident or accident.
- Set reminders: Keep track of your monthly due dates, your policy’s timeline, and your renewal date. This will give you the chance to shop around for potentially cheaper insurance plans before your renewal deadline and help you stay on top of payments.
- Monitor your billing and mail: Whether you pay your bill online, over the phone, or by check, make sure you carefully read through any emails or mail that you receive from your provider. This can help you avoid missing any important information, such as a notification that you missed a monthly installment.
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FAQs
What happens if you make an insurance payment late?
Most insurance companies offer a grace period before they cancel your plan and remove the valid insurance from your vehicle. You should aim to make your late payment before this period is up.
Your provider will contact you if you missed a payment, and if your payment is late but you pay before the grace period is up, your policy won’t be canceled. A late payment could incur a late fee and it may show up on your payment record, but this fee could be waived if it’s your first time paying late.
How long can an insurance policy lapse?
Typically, drivers have up to 30 days to pay their car insurance installment before their coverage is canceled. Some providers offer up to 30 days, while others offer grace periods as strict as 24 hours. The average grace period is 10-20 days.
How long does an insurance lapse stay on your record?
The amount of time a lapse stays on your record depends on the length of your lapse and whether your policy was canceled or declined renewal due to the lapse.
If your policy was canceled or your renewal was rejected due to the coverage lapse, it will stay on your driving record longer than if you missed your payment but were able to resolve the issue and reinstate your policy.
