If you fail to make your auto insurance payment on time, your policy will be cancelled. If this happens, there are consequences. While not every insurance company will cancel your policy on the day you miss your payment, most will. While some companies allow a grace period for payment, there are disadvantages to working with those companies – they don’t always offer the best coverage, and if you miss payment within the grace period, it can be even harder to get your policy reinstated.
Whether you miss payment on the day your premium is due or whether you’ve missed payment within the grace period allowed by you insurance company, the consequences are the same. Your policy is cancelled, and you are without auto insurance. What are the consequences of this?
First off, and most importantly, driving without insurance is illegal in most U.S. states. The laws in different states vary, and even if you pay your insurance on time it is important to know what your state minimum liability, etc is so that make sure you are adequately and legally covered. Driving without the state minimum requirement of insurance is also illegal.
If you are caught driving with inadequate insurance or with no insurance at all, you could be charged money, and your license and registration can be suspended. It can be a long, arduous process to get these things rectified. One way to avoid these penalties is to make a preemptive strike. If you know you will not be able to afford to pay your insurance premium, you can relinquish your license plates and registration to the DMV. If you do this, you can avoid the fees and fines, and the suspension, but you will still not be able to drive, because your car will have no registration and no plates, both of which are required to operate a motor vehicle.
Even if you manage to avoid the penalties and fees associated with letting your insurance policy lapse, you are still faced with two problems. One, you are unable to drive your car without breaking the law. Two, it can be very difficult to obtain a new insurance policy, as the company you were unable to pay will consider you a risk and will be unlikely to sell you a new policy. That will mean that you will have to shop for new insurance with a new company, and you will likely have to pay an even higher premium, if you are able to obtain a new policy at all.
Generally, it is best to shop for an insurance policy you can afford, and to pay your premium on time. It might be best for you to pay your entire premium upfront, so that you do not have to worry about paying your premium every month. If you cannot afford to do that, make sure you set up an auto withdrawal of your policy premium and make sure there is enough money in your account to cover the cost, so that you don’t get stuck without car insurance.