What Happens if You Don’t Pay Your Car Insurance?
Not paying your car insurance can lead to a loss of coverage, increased premiums, and even losing your car—but you may have options.
Written by Jason Tushinski
Reviewed by Kathleen Flear
If you don’t pay your insurance premiums, you could lose your coverage, your premiums might increase, or a collection agency may contact you for payment.
- You may get a grace period to make a late payment, but not all companies offer this.
- Late payments can trigger a loss of coverage and higher car insurance rates.
- If you’re having trouble paying, ask about payment options or get more car insurance quotes to find a better rate.
- To ensure you have coverage, it’s important to always pay your premiums on time.
- You may get a grace period to make a late payment, but not all companies offer this.
- Late payments can trigger a loss of coverage and higher car insurance rates.
- If you’re having trouble paying, ask about payment options or get more car insurance quotes to find a better rate.
- To ensure you have coverage, it’s important to always pay your premiums on time.
If you don’t pay your car insurance premium, you could face serious consequences
Nonpayment can have serious repercussions, including a hike in your insurance bill and possibly losing your car.
After missing one payment:
- You’ll receive a reminder from your provider. This sternly-worded letter will be an attempt by your insurance company to get you to pay your premium. If you’ve opted for paperless billing, you may receive this letter in the form of an email or a text message.
- You may be charged a late fee. Do everything you can to pay your premium before the due date—otherwise, your next insurance payment may be even higher due to additional fees.
Note: Most insurers offer a grace period, or a set amount of time to make up a missed payment. However, if you don’t pay your premium during this time, your insurance will be canceled.
If your insurance is canceled:
- You won’t be covered if you’re in an accident. The point of having car insurance is to protect you from paying expensive medical bills and vehicle repairs after an accident. Ifyour insurance is canceled and you’re at fault in an accident, you’ll have to pay for those damages out of pocket.
- It will be illegal to drive in most states. In almost every state, it’s mandatory to carry a certain amount of liability insurance coverage. If your policy is canceled, you won’t meet theseminimum car insurance requirements—and if you’re uninsured, you could face additional penalties if you’re pulled over or you get into an accident.
- Your insurance premiums will go up. Going without car insurance for any length of time is considered a lapse in coverage. This causes insurance providers to see you as ahigh-risk driver—and, as a result, you’ll pay higher rates when you get a new policy.
- Your driver’s license and registration may be suspended. In some states, the Department of Motor Vehicles (DMV) monitors insurance information, so they’ll be notified by your insurance company if your coverage is dropped. Depending on the laws where you live, that could lead to a suspension of your driving privileges.
- You could be contacted by a collection agency. Some car insurance companies will send a collection agency to pester you about your missing car insurance payment. While you’re not likely to encounter Dog The Bounty Hunter, having a collection debt can impact yourcredit score.
- Your car could be repossessed. If your vehicle is leased or financed, you may be required by your lender or lessor to carry a certain amount of insurance. If your coverage is dropped for non-payment, your lender could seize your vehicle.
- You could be required to carryforced-place insurance. Instead of seizing your vehicle, your lender or lessor may add a mandatory policy to your vehicle—and you’ll have to pay that when you make your car loan or lease payment each month. These policies are typically more expensive than a standard car insurance policy.
Contact your insurer if you think you’ll be late on your payment
You should do everything in your power to avoid missing an insurance payment. If you think you’re going to be unable to pay your next insurance premium, call your insurance agent right away.
When you call, ask whether your insurance company offers a grace period, and how long it is. Also, watch for the reminder your insurer will send as it may have additional information.
Pro Tip To avoid the consequences that come with canceled insurance, try to adjust other areas of your budget so you can make your payment.
How grace periods work
Depending on your insurance company, you may have a grace period—usually 10 to 20 days—before you lose your coverage.
If you miss your payment and your insurer decides to revoke your auto insurance policy, you’ll be notified of the cancellation. That said, they may reinstate your auto insurance coverage once you pay the insurance costs that you owe.
Important note: Try not to rely too heavily on your grace period—many insurers cap how many times you’re allowed to use them. That means the next time you’re late on your payment, your insurance company could cancel your policy right away.
MORE: What is considered a lapse in insurance for auto insurance companies?
How to lower your car insurance premiums
If you’re having trouble making your insurance payments, look for
ways to save on your auto insurance
. Here are some ideas:- Bundling: If you have more than one type of insurance policy, ask your insurer if they offer bundling. For instance, if you can bundle your auto insurance with your homeowner’s insurance or renter’s insurance, you could save on both policies.
- Discounts: Most insurance companies offer discounts for things like safe driving, signing up for telematics, or being a student. Sometimes they don’t advertise these discounts, so it’s worth calling to see if you qualify!
- Increase your deductible: The higher your deductible, the cheaper your monthly payments will be, so raising your deductible can be a quick way to lower your premium. Just be thoughtful about what you choose—you need to be able to come up with your deductible within about a week if you’re in an accident.
- Adjust your coverage: While we don’t recommend dropping comprehensive and collision coverage entirely, you may find that the limits are higher than the protection you need for your vehicle. If you drive an older, paid-off vehicle, you may find that it makes sense for you to lower your coverage limits to save on your monthly bill.
- Comparison shop: Insurance companies all have unique ways of calculating rates, so you could get widely different rates from different insurers. To make sure you’re getting the best price, getcar insurance quotesfrom at least 3–5 companies before you buy a new insurance policy.
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FAQs
Is there any reason to not pay car insurance premiums?
Nope. It’s incredibly important to pay your premiums on time, as you risk losing your coverage if you don’t. If you can’t afford to pay your rates, you can always shop around for a better policy that is more affordable.
Does not paying insurance affect credit?
It absolutely can. And a dent in your credit score can have a serious impact if you’re trying to buy or rent a home, buy or lease a car, apply for a loan or credit card, or make investments.
Does not paying insurance affect credit?
It absolutely can. And a dent in your credit score can have a serious impact if you’re trying to buy or rent a home, buy or lease a car, apply for a loan or credit card, or make investments.
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