Whether you make monthly, semi-annual, bi-annual, or annual payments for your car insurance, you could suffer severe consequences if your payment is even one day late. Some states require that car insurance companies close an account at midnight on the policy’s due date. Since it is a state law, the insurance companies don’t have any choice but to comply. Once your policy has been declared officially lapsed, you will have a ton of problems that can take years to clean up regardless of whether you get different car insurance quotes online. The best way to handle late car insurance payments is to find ways to make sure that you are never late in the first place.
Some car insurance companies have the legal obligation to attempt to contact you before your policy is considered terminated. If you don’t respond to their phone calls or letters, however, they have no choice but to report you to the local DMV. The state can immediately suspend your driver’s license if they have reason to believe that you are driving an uninsured vehicle. You will be unable to drive legally until you purchase a new car insurance policy and visit the DMV to have your driver’s license reinstated. In most cases, the reinstatement fee can cost hundreds of dollars. Finding lower auto insurance costs after allowing a policy to lapse can be difficult. Your new policy could cost you almost twice as much as you were paying before for the same coverage.
It Could Get Worse
If you continue to drive after the late payment causes your car insurance policy to be terminated, you run the risk of being involved in an accident while you are uninsured. Uninsured motorists who cause traffic accidents face steep fines as well as the consequences of driving illegally. Some states might suspend your driver’s license, tow your car, or even throw you in jail for up to 60 days if they catch you driving without car insurance.
Penalties Vary Depending on State
Each state regulates car insurance differently. The state of New York charges a graduated late fee for every day that your car insurance payment is late. The longer you take to reinstate your insurance, the higher your fees will be. Nevada allows the car insurance company to attempt to contact a driver through the mail if their policy payments are late. If the insurance company doesn’t receive a reply within a certain amount of time, the state will automatically suspend the driver’s license until the driver presents proof of insurance coverage to the DMV.
Reinstating a Lapsed Policy
The worst thing you can do if you are late on a car insurance payment is pretend it didn’t happen. Contact your agent as soon as possible to find out what your options are. The chances are good that if you have a clean payment record and a clear driving record your insurance company will be able to work with you to reinstate your car insurance quickly and relatively painlessly. The longer you wait before you take care of it, the worse your consequences will be. You should also be prepared for your new policy rates to be higher than the old policy rates.
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