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Car insurance isn’t cheap, and paying premiums on time can be difficult for families and individuals with tight budgets. If you haven’t been paying your premiums on time or at all, whether or not you still have coverage is at the discretion of your insurance company.
If you get in a crash or your car gets stolen or vandalized, you will need to file a claim with your insurance agency. Your claim may be denied if your record shows missed or late payments.
Your Insurance Company May Offer a Helpful Grace Period
Car insurance companies are not required to provide a grace period for late payments, but fortunately, many of them do anyway. Some insurance agencies offer short grace periods of only three days while others let you go as long as a month without paying your premium before they cut off your coverage.
Whether or not you have a grace period to pay your car insurance premium depends on your insurance carrier and the state where you live. Drivers in New York, for example, regardless of what company insures them, do not have grace periods to pay their car insurance premiums. If you miss a payment in New York, you lose coverage immediately.
Depending on the individual insurance company’s policy, paying in your grace period can come with a few risks. These include:
Many insurers tack on a late fee if you pay your premium in the grace period. This can be as low as $2 and as high as $20. If you pay your premium late consistently, you could end up spending much more than you budgeted on your car insurance.
Payment Plan Problems
If you pay your premiums in your grace period every month, it can throw off your payment schedule. Too many grace period payments could saddle you with a double bill one month.
Future Car Insurance
Insurers will be less likely to take you on as a client if your record shows frequent late or missed payments. Paying your premiums in the grace period can make it hard for you to switch insurers.
Slow Change Requests
If you pay your premiums late, your insurance carrier may not process your change requests until the payment goes through. This can cause you to lose money and time waiting on your change request.
Avoid issues like these by paying your premiums on time every month. If paying your insurance on time is too much of a financial burden, you may want to consider switching to a new insurance company. Research your options to find out which companies offer premiums you can afford. You should also ask your carrier about car insurance discounts.
While it’s nice to know that you may have a grace period to pay your premium during a particularly hard month, it’s a good idea to stay in the habit of paying on time. When you pay on time, you never have to worry about losing coverage or breaking the law by driving without insurance. Contact your insurance company today to find out what your policy says about grace periods, late fees and coverage cutoffs.