What Happens if You Don’t Pay Your Car Insurance?

Failure to pay your car insurance on time may cause your provider to cancel your policy, leading to a coverage lapse.
Written by Liz Jenson
Edited by Amy Bobinger
If you’re not able to make your
car insurance
payments as agreed, your insurance provider will send you a reminder letter. But if you don’t pay your premium with your insurance company before the end of your grace period, your provider may cancel your policy, resulting in a lapse in coverage.

What happens if you don’t pay your car insurance?

There are serious consequences for missing even a single payment on your car insurance, including a hike in your insurance costs, late fees, and even losing your car if you have an outstanding
car loan
. However, if your provider hasn’t canceled your policy yet, you may still be able to make a payment. 

What to expect after your first missed payment

After you miss a single payment, your provider will likely:
  1. Send you a reminder letter. After a missed payment, your provider may attempt to get you to pay your premium via a strongly worded letter. If you’ve opted for paperless billing, you may receive this letter in the form of an email or a text message.
  2. Charge a late fee even if they allow you to make your payment. Many auto insurance providers will add a late fee to your insurance bill if you don’t pay for your policy on time.
While most providers have a grace period, some will simply send you a notice that your policy has been canceled if you fail to make payments as agreed. This cancelation notice will include the date that your policy cancelation becomes effective. 

What to expect if your insurance company cancels your policy

If you fail to make a payment before the end of your grace period, or if your insurance company doesn’t offer a grace period for late payments, your auto insurance provider will cancel your policy.1 
You’ll be notified by your provider via a cancellation notice if your insurance policy has been canceled. You should receive a notification from your provider via your communication method of choice (usually by phone, email, or US mail). 
If your company cancels your policy, the potential consequences include:
  • An insurance lapse: Failure to reinstate your policy or find a new one in time will result in a
    car insurance lapse
    . This will make it more difficult to find affordable coverage in the future.
  • Your premiums will go up: You’ll be classified as a
    high-risk driver
    and often charged a high reinstatement fee if you fail to make car insurance payments as agreed. A canceled policy and/or insurance lapse will make it even more difficult to find affordable coverage from future providers.
  • Legal consequences: It’s illegal to drive without at least meeting
    state minimum car insurance requirements
    . In some states, the Department of Motor Vehicles (DMV) monitors insurance information and may suspend your driver’s license if you’re without adequate coverage.2 
  • A hit to your credit: Your insurance provider may also choose to report your late payment to a collection agency, which would result in a hit to your credit score
  • Problems with your lender: If you have a leased vehicle or an active car loan, your lender may either repossess your car or add mandatory force-placed insurance to your car loan payments each month.3
The good news is that even if you’ve received a cancelation notice in the mail, you may be able to reinstate your auto insurance coverage under your current insurer once you’re current on your payments and you’ve paid any resulting fees. This won’t be possible with all insurance providers, so contact your insurer as soon as possible if you’d like to pursue this option.
Even if you’re able to find a new policy or reinstate coverage following a cancelation your rates will go up significantly. Here are the average rates offered to drivers after a coverage lapse.
Insurance company
Average cost
Average after lapse
% over avg

What is the grace period for missing a car insurance payment?

Every insurance provider offers its own grace period for a missed payment, but generally, grace periods are between seven and 30 days in length. Check your policy details for more information on the grace period offered by your provider.
Once your grace period is up, you’ll have to either pay your car insurance premium or lose your insurance coverage. Being uninsured can result in a whole slew of problems, including being unable to drive legally without a valid car insurance policy.
Remember, though, that you should never rely too heavily on your grace period. Many car insurance companies cap how many times you’re allowed to use them, meaning the next time you’re late on your payment, your insurance company could cancel your policy right away. Insurance providers see late payments as a high-risk behavior, and therefore you won’t be able to make regular late payments on your policy.

What to do if you’re worried about missing a payment

You should always avoid making late insurance payments, but if you think you’ll need to make a payment past the due date, contact your auto insurance provider as soon as possible. 
When you call, ask the insurance agent whether your insurance company offers a grace period and how long it is. Also, watch for the reminder letter your insurer will send, as it may have additional information about next steps after non-payment.
If you need a little more time to come up with the money for your insurance payment, you may ask about other payment options. Opting to
pay your bill with a credit card
, for example, is usually discouraged since it can cause you to go into debt. However, using this payment method will give you more time to come up with the money for your payment without the risk of consequences like an insurance lapse, license suspension, or vehicle impoundment.

How to make sure you never miss a car insurance payment

If you’re struggling to make your premium payments on time, here are a few tips and tricks that could help you make payments on time and lower your rates in the future.
  • Set up automatic payments: If you’ve missed payments due to simply forgetting to pay your bill, setting up automatic payments authorizes your insurance company to charge your bank account, debit card, or other payment method of choice each month without any extra work on your part.
  • Ask about discounts: Every insurance company offers
    car insurance discounts
    of one kind or another, so ask your provider about your options to lower your rates.
  • Raise your deductible: A high
    results in lower car insurance rates, but never raise your deductible higher than you can afford to pay in the event of a car accident.
  • Try bundling your homeowners and car insurance coverage: Many auto insurance companies will allow you to
    bundle your auto and home insurance
    at a discounted rate. This can lower your rates, making your monthly bill more affordable, and will allow you to make one payment each month rather than juggling multiple policies.
  • Drop collision and comprehensive coverage: While it’s a good idea to carry as much coverage as you can afford, it’s pointless to carry additional coverage if you can’t make your monthly payments. You’ll need to carry at least the minimum amount of coverage required by state law, but dropping
    full coverage
    in favor of state minimum liability coverage can significantly lower your rates in a pinch.
  • Shop around for a better rate: If you’re finding it difficult to pay for your auto insurance policy, you may be able to find a better rate elsewhere. Use
    to learn more about your insurance options, get personalized quotes from several providers, and compare rates. This will ensure that you’re getting the best deal available.
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Do you get a grace period for car insurance payments in California?

California doesn’t have any specific laws as far as car insurance payment grace periods. This means that grace periods will be set by your provider, so you’ll need to contact your insurance agent to learn more about your policy guidelines.

Does missing a car insurance payment cause higher rates?

If you miss a car insurance payment but make your payment in full before the end of your grace period, you might not see a huge increase in your rates. After several missed payments, a canceled policy, or a lapse in coverage, however, you’ll be labeled “high-risk” and, as a result, will see higher rates and have a difficult time finding affordable coverage.

Do you have to carry car insurance?

Legally, you have to carry car insurance that meets at least the state minimum requirements. This typically includes
liability coverage
(both property damage liability and bodily injury liability), and in some states may also include
personal injury protection (PIP)
, and more. Check your state laws to learn more about the requirements in your zip code.

Meet our experts

Liz Jenson
Liz Jenson is an insurance writer who specializes in general automotive and insurance topics. Liz’s mission is to produce informative and useful content to help car owners make smart choices when buying cars and car insurance. Since joining Jerry in 2021, Liz has written nearly 4,000 long- and short-form articles on topics including state-specific insurance recommendations, common car insurance questions, and deep dives into vehicle model details.
Before they came to Jerry, Liz was a full-time student at Indiana University, Bloomington working on a double major in English and French.
Amy Bobinger
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Licensed Insurance Agent — Expert Insurance Editor
Expert insurance writer and editor Amy Bobinger specializes in car repair, car maintenance, and car insurance. Amy is passionate about creating content that helps consumers navigate challenges related to car ownership and achieve financial success in areas relating to cars.
Amy has over 10 years of writing and editing experience. After several years as a freelance writer, Amy spent four years as an editing fellow at WikiHow, where she co-authored over 600 articles on topics including car maintenance and home ownership. Since joining Jerry’s editorial team in 2022, Amy has edited over 2,500 articles on car insurance, state driving laws, and car repair and maintenance.

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