Car Insurance Cancelled, Now What?
We're all human, and we're all prone to making mistakes. Missing an insurance payment is sometimes one of those mistakes! If you miss a payment, you should check with your insurance agent to see if they have a grace period and, if so, if you are eligible. Unfortunately, if that window has passed and your insurance has officially lapsed—that is, been canceled by your insurance company—you will need to have it reinstated. Continue reading to learn all about the grace period, missed payments, and reinstatement.
What Is a Grace Period in Car Insurance?
Your carrier will not cancel your policy if you miss an invoiced payment due date, so don't worry if you've just missed it. In most cases, insurance companies will not cancel your policy until the end of your grace period, specified on a separate Notice of Cancellation and can range from 10 to 30 days after your payment's due date. Grace periods vary by insurance company and state, so check with your car insurance company after a late payment to see if you're still within that time frame. If the grace period hasn't expired, you should be able to pay off your balance and resume where you left off. Some insurance companies may charge a minor late fee, but you should not experience an insurance lapse or a rate increase once you make the payment.
What Should You Do If You Don't Make the Grace Period?
If you haven't made your car insurance payment and aren't within any applicable grace period, your policy has lapsed and you're no longer legally insured. Unfortunately, once your car insurance policy has officially lapsed/been canceled, there is no additional grace period. Your insurance company will send you a notice before the cancellation date informing you of your final date of coverage. After that date, you are not permitted to drive until you obtain insurance from another provider, reinstate your policy, or otherwise meet your state's financial responsibility requirements.
What Are the Consequences of a Car Insurance Lapse?
Contact your insurance company ASAP after a lapse in insurance to avoid the following:
Additional fees from the DMV: Depending on where you live, some local governments charge uninsured drivers a daily fee for having lapsed insurance.
Repossession of your car: If your lender or leasing company requires car insurance on their vehicles, a lapse in insurance could cause them to repossess your car.
License suspension: Your insurance company is required in some states to notify your DMV if your policy expires. Because most states require car insurance on registered vehicles, a lapse in insurance can result in your license being suspended by the DMV.
Car insurance rates increase: When you have a lapse in coverage on your record, you will almost certainly see an increase in rates the next time you shop for car insurance. Some insurance companies will refuse to insure you because you are considered high-risk. In this case, you'll need to find a carrier that specializes in high-risk driver policies.
How to Restore Your Auto Insurance
When you reinstate your policy, you keep the same insurance plan, policy number, and level of coverage that you had before the lapse. Inquire with your insurance agent to see if you are eligible for policy reinstatement. To reclaim your policy, you must pay the missed payment as well as any additional fees or increased rates. If you were satisfied with your level of coverage, reinstating your policy is usually more convenient than searching for a new insurance policy.
If you've had a lapse in coverage and are struggling to find affordable insurance, Retcho Agency is here to help. We have policies for every driver, including high-risk drivers and those who have had previous coverage gaps. In fact, if you've had insurance in the last five years, you may be eligible for a discount on your new policy. Contact us and let us help you.