What to do if you pay your car insurance premiums late? How will paying a car insurance premium late affect car insurance rates?
While enjoying a weekend with the family, you suddenly realize that you completely forgot to pay your auto insurance premium. The first thing to realize before you have a panic attack is that many Americans, just like you, forget to pay certain bills. With so many things a person has to pay like rent, cell phone bill, utilities, car bills, insurance and other things, it is not uncommon for the average human being forget one of those important bills. Whether you completely forget your car insurance bill or don’t have enough money, it’s important to understand that it can have serious consequences if you don’t try to remedy the situation right away.
Many people make the mistake of thinking that late payment to an auto insurance company will only result in late fees. However, this is not entirely true as some insurance companies are very strict when it comes to late payment. Some of these strict companies may threaten to void your policy, while others are already doing so. An example of this can be seen if you pay your premium too late. The insurance company may not terminate your policy immediately, but they may issue you a “non-renewal notice”, which means that at the end of the year, when it is time for you to submit a new application for insurance with the company, it may no longer accept you. If this happens, you will need to purchase insurance from another car insurance company.
Another consequence of not paying for insurance on time is that after reviewing your payment history, they only allow you to renew the policy with them if you pay for the full term. This means that instead of giving you the option of receiving a monthly bill and paying your insurance premiums, you pay the full amount at the start of your coverage year. If you don’t have enough money to renew the policy, the best thing to do is to try to get insurance from another company. However, you should be aware that once you have made late payments this will be reversed if you go to other companies, in which case they may also pay you in full before providing you with cover.
The one thing most people don’t realize is that, like any other type of credit, insurance companies share the history of previous policyholders and how they fared with the company. If you’re a good customer, you’ll get discounts from other insurance companies, but if you’re late, other companies may raise your rates and some may refuse to cover you.
Perhaps the worst consequence of not paying your premiums on time is to cancel your policy immediately. If so, you won’t even know the status of the policy until you receive a hard copy in the mail, a call from an agent, or an NSF check in the mail. You won’t always get an NSF check because some companies use it to pay off the balance you still owe. Believe it or not, these are great ways to know that your insurance policy has been terminated.
Suppose for a moment that you are driving down the freeway and an officer pulls you over. When they ask for the insurance, you give them the card and they find out that you are uninsured. Depending on the regulations in your state, you can expect a hefty fine or, in the worst case, a prison sentence. Even worse, think about what would happen in the event of an accident. You think everything will be fine, and when you break the bad news to your insurance company, they tell you that your policy was canceled before the accident happened. You will end up with a totaled car and you will have to pay compensation to the other person.
These are the disastrous consequences that “innocent” late payments can have on your policy. Perhaps the wisest thing to do when you are late paying is to contact the insurance company to let them know the reason for the late payment and let them know that payment is coming. With some companies, you can even call right away and pay over the phone.
With so many bills to pay each month and the stressful lives of most American families, it’s best to have a calendar with all the bills due on paper or even better to schedule your payments to be automatically deducted from your checking account by direct deposit This can help you avoid not only late auto insurance payments that can be disastrous but also other bills that could damage your credit in the future.