Struggling to keep up with your expenses and can’t cover car insurance this month? Read on to learn about the consequences of a late car insurance payment.
In 2016, the average American spent nearly $1,000 on auto insurance.
Cars are incredibly useful, but they can also eat up money. You’ve got to pay for gas, maintenance, and on top of that, you’ll need to get insurance.
With so many other things to pay for, it’s all too easy to make a late car insurance payment.
What happens if you do? Read on to learn some of the consequences of failing to pay your car insurance on time.
You’ll Get a Warning
The first thing that is likely to happen will be your insurance company getting in touch to inform you that you’ve missed a payment.
It’s in their best interest to try to get you to pay the amount due rather than terminating your insurance immediately. They’ll inform you of how much you owe, when it was due, and when you’ll need to pay it before incurring other consequences. This is known as a grace period.
What Is a Grace Period?
Typically, insurers will allow you to make a late payment as long as it falls within a certain timeframe. This timeframe will vary from insurer to insurer; some may offer as much as 30 days, others as few as a day or two.
You are likely to have fewer consequences if you pay within the grace period, but you may still incur late fees, as explained below.
A Late Car Insurance Payment Will Incur Late Fees
If you don’t pay your insurance on time, it hurts the provider’s bottom line.
It will mess with their cashflow and there will be additional costs involved in trying to chase up the missing money. Most insurers will try to recoup these losses by charging you a late payment fee.
This is an additional amount that they will add to your bill. If you don’t want to incur late fees, you’ll need to be sure to pay on time.
Your Policy May Be Cancelled
If you make regular late payments or don’t pay within the grace period, your insurer may cancel your policy.
If this happens, you’ll need to stop driving your car immediately. If you’re caught driving without adequate insurance, you could face fines, having your license suspended, or even having your car impounded.
You’ll also face further issues when you come to try to ensure your car again.
You’ll Face Higher Premiums
As someone who has missed payments in the past, you’re a far less enticing prospect for insurers.
A history of late or missed payments means that you’re likely to face much higher premiums than those who have always paid on time. In the long term, missing a payment can end up costing you a lot of money.
That’s why it’s always best to try to find a way to pay on time. You may find title loans could help by allowing you to leverage the equity in your car to borrow enough money to make the payment.
Now You Know The Risks
Now you know the risks of making a late car insurance payment, we hope that you’ll take steps you ensure you never miss one of your own.
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