With people struggling to make ends meet due to the COVID-19 pandemic and its economic fallout, many have had to make hard choices each month about which bills they can pay and which they can’t. Car insurance is not a luxury, it is a requirement. Therefore, not being able to pay your car insurance premium can have grave consequences. Thankfully, some auto insurance companies have a grace period that may help to protect you from losing your coverage if you are late with a payment. Let’s learn more about an insurance grace period and how it can help you.
Why a Grace Period?
Car insurance companies offer a grace period in order to help their customers in certain situations, such as:
- Simply forgetting to make the payment on time
- Issues with receipt of the bill
- Payment delays due to banking issues
- Financial hardship
In some cases, auto insurance companies have deemed that it is in their interest to allow some leeway in payment, at least once, rather than discontinue a policy right away upon a missed payment date. However, an insurance grace period does not last for long. Insurance companies know there is a risk that they may have to pay for damages even if you haven’t paid your last premium. So, once the grace period is up you may be facing cancellation immediately.
How an Insurance Grace Period Works
The idea is that you are protected from immediate cancellation if you are late paying your premium. The grace period, how long it lasts, and other regulations are governed by each state. So, it’s important to know the rules for your state and for your own policy.
For instance, there are some state that do allow an insurance company to drop you immediately for nonpayment on some types of policies.
The auto insurance companies are not fans of a grace period and like to keep it as short as possible to protect themselves. If you have an accident while in your grace period, the company will still have to pay out.
What Happens If You Don’t Pay During the Grace Period?
The consequences of not paying your premium by the end of the grace period usually include a cancellation notice. The best thing to do if you don’t think you’ll be able to make the payment is to call them to discuss options.
Cancellation of your auto insurance policy due to non-payment can cause you further headaches when you attempt to buy insurance again. Not only will it be harder, it will be more expensive after a cancellation.
So, be proactive if you don’t think you’ll make your payment on time. Talk to the company or to your insurance agent and see if you can reach an agreement that keeps you covered.
Are There Alternatives to Insurance Grace Periods?
It’s important to address the root problem of not making your auto insurance payment. Here are a few suggestions:
- If the problem is that your payment is due on the 1st of the month but you don’t get paid until the 5th, work with your insurance company to move your due date.
- If the problem is simply that you are forgetting to make the payment, move to automatic payments.
- If the problem is that the payment is simply too high, take a look at your coverages and see how you can lower your premiums with higher deductibles or lower coverage amounts.
The best way to save money is to compare rates. When you’re ready to shop around, the InsuranceWins form is a great place to start. Simply fill out the form and get ready to receive quotes from well-known carriers who are ready to help you afford car insurance.