What Should You Do If You Can’t Afford To Pay Your Car Insurance Bill?

Sometimes life throws you a curveball – you lose your job, are hit with a big medical bill, or need to pay for legal fees. Whatever the reason may be, you suddenly cannot afford to pay for your car insurance premiums and you need to know what your options are. Fortunately, you’ve come to the right place.

What Happens If You Don’t Pay Your Bill

Unfortunately, auto insurance companies are not that flexible when it comes to helping out people who are struggling to pay the bills. If you are unable to make payment for your premium by the due date, your auto insurance policy will be cancelled on that day.  In the event your policy is cancelled, you will officially be uninsured.cannot afford auto insurance bill

Other types of insurance, like life insurance, often have what they call a “grace period.”  A grace period is the period of time after your premium is due in which the policyholder can make a payment without losing coverage.  With car insurance, however, there is generally no grace period to speak of. If you miss a payment, your policy has therefore lapsed.

In a lot of places, you the penalties for lapsing in auto insurance coverage can be quite severe.  Fines from the police and/or license suspension are just two of the many bad things that can happen to you if you are caught driving with lapsed insurance coverage.  Often times, the only way to avoid these penalties is to hand over your license plates and registration to the DMV/RMV in your local jurisdiction.

The most important thing in the event of a lapse, however, is to keep your vehicle off the road.  It’s obvious that you should not drive your vehicle without insurance coverage, but did you know that you cannot even park your car on public roadways without it being registered?  If you do not have a driveway or private spot to park your vehicle in while you wait to renew your coverage, you will need to find other arrangements.

Turning Your Car Insurance “Back On” After a Lapse

Unfortunately, if you try to turn your car insurance policy back on after a lapse in coverage, you may find that your insurance rates have increased.  Insurance companies use multiple calculations to determine your risk to the insurer, and one of the factors they look at is whether or not you’ve had a record of not paying your bills.

If your car insurance policy lapses, you will have to then reapply for auto insurance coverage.  Affording to recent studies, drivers who let their policies lapse ended up paying 8.8 percent more for car insurance than they originally paid.  The reason or this is because auto insurance companies consider delinquents and non-payers to be in a higher risk group.

Prevent This From Happening – Prepare Now For The Unthinkable

The best option, therefore, is to never let your insurance policy lapse in the first place.  If you sense financial hardships coming on, your best option is to drop some auto insurance coverage to a level at which you can afford.  Check out the state minimums for auto insurance coverage to see how much auto insurance you can get away with legally in your state. Often times the bare minimum, basic coverage option is quite affordable. While not ideal, it can be used in the short term until you are able to get back on your feet.

Another option is to start lowering your auto insurance rates today. It’s always better to be safe than sorry, especially when it comes to something that could be as expensive as a lapse in auto insurance coverage.  If you want to lower your insurance rates, there are a few different things you should consider doing:

Shop Around For Rates

Most personal finance experts agree that the best way to lower your auto insurance premiums is to shop around for rates from other insurance companies. Often times the only way to really see a substantial drop in premiums is to switch your insurer. To begin, use a tool like the one on the top of this website to check for quotes from different insurance providers in your area.

Drop Certain Coverage

As we briefly touched on before, it might make sense to start dropping some unneeded coverage. If your car is older and not worth that much money anymore, you should consider dropping collision and comprehensive coverage. By doing so, you will be able to save a big amount on your monthly bill. Just remember, however, if you drop these coverage types, you might be on the hook for paying for your own auto repairs if something happens to your car.

Raise Your Deductibles

If you raise your deductibles, you will see your premium rates drop.  Although the drop will not be significant, it might help just enough to get you to the point where you can afford to make your bill payment.  Be forewarned, however, if you are involved in an accident and need repairs done to your car, you will be forced to fork out more money out-of-pocket. If this is a risk you are willing to take, then by all means – raise your deductibles!

Drive A Different Car

One of the better ways to lower your auto insurance rates is to drive a car that is cheaper to insure. When it comes to insurance rates, not all cars are created equal. Some cars, for a myriad of reasons, are more expensive to insure than others. If your car make and model happen to be the type that demands a high premium, you might want to reconsider what car you drive.

Remember, in the United States, driving without auto insurance is illegal. The penalties for letting your auto insurance lapse can also be quite severe. Therefore, it’s always advised to maintain a good standing with your auto insurance company.  Call up your insurance agent today to discuss ways in which they can help you save more money on your insurance premiums.


  Comments: 29

  1. I need insurance but I don’t have it on my girlfriends car becauise I had my money frauded so how can I drive that’s whatr I want to know

    • Armando@4AutoInsuranceQuote

      Hello Scott,

      To be sure that you would be covered in the event of claim, you would need to have an insurance policy or be listed as a driver on your girlfriends policy. If you will be taking out a policy in your own name, then you have to let the insurer know in writing, from the beginning, that the vehicle is in your girlfriend’s name. Since you don’t have “insurable interest” that is, a direct financial interest in the vehicle, it’s highly unlikely any insurer would write you the policy knowing that the vehicle is not in your name. The right thing to do would be to switch ownership of the vehicle in your name and take out a policy in your name or have your girlfriend add you as a driver on her own policy.

  2. What I am trying to figure out is I have a bad driving record so does my wife I have to have sr22 insurance until 2019 just to keep my license. I have the lowest coverage possible for the state of Wisconsin and I’m still paying 350 a month for auto insurance on one car I can’t afford that and pay rent and utilities. What I wanted to know was is there any way to get a cheaper rate or is there any type of assistance for someone in my shoes. I haven’t gotten a ticket in 2 years but they go back 5

    • The problem is the government that allows this foolishness. Stepping on the little guy to perpetuate the growth of major Corperate giants. If you’re going through hard times. You’re at higher risk and deserve to be punished for it. Because you HAVE to be a horrible person that can’t drive. Oh and if you can’t afford your high ass payment. We’ll raise it even higher and possibly have you thrown in jail. Welcome to America.

      • I totally agree with you, Daniel. It’s a nice set up for the insurance people — with absolutely NO protection for the little guy. It’s called SLAVERY or indentured servitude. While coverage is important to protect everyone on the road there should be many other options available for those less able to pay. It’s pretty horrible. 🙁

    • Armando@4AutoInsuranceQuote

      Hello Jacob,

      Unfortunately there are few options available to SR22 drivers. You should look into non-admitted carriers or coverage offered through the state for high-risk drivers for lower rates. Some of these insurers only consider the past 3 years on your record. Though honestly if I were in your position, I’d probably forego driving altogether and seek alternate means of transportation- bus, train, taxi service, carpool with a co-worker. If you don’t want to forego driving but are willing to relocate, New Hampshire and Virginia do not require drivers to carry auto insurance and 30 other states do offer alternatives (bonds or cash deposits) to insurance which are acceptable by law. You might consider moving to these areas until your SR22 status expires.

      • Pam Kuykendall

        My insurance comes up for renewal in Sept. I found a different company with a cheaper amount and got a policy. What will happen if I don’t finish paying the old policy?

  3. Hi. I recently had a car accident and the Insurance didnt cover me. Am I able to stop paying my monthly insurance payments and focus on fixing my car? Will those missing payments stack? Or will I get fined for not paying? Please help! Thanks

    • The day you stop paying your insurance coverage will stop completely, at least that’s how it is for most Insurance companies. I make sure to double check with your insurer and double check your policy just to make sure that you will not be fined. You may need to call and cancel directly with your insurer. If you stop paying your Insurance and get into another car accident however there will most likely be a law penalty for you not having car insurance if you are caught driving

    • Armando@4AutoInsuranceQuote

      Hello Sebastian,

      You should continue to pay your policy. Most insurers allow a grace period after your premium due date of a few days up to a month before your coverage is canceled. If you allow your policy to cancel, you will likely find it difficult and very expensive to find coverage again as insurers charge higher rates if you don’t have “prior coverage”, which actually means active coverage at the time you switch. The insurer may notify the state your coverage has been canceled and if your state requires you to hold insurance, they will place a freeze on your registration renewal until you provide proof of active coverage. Your insurer may have the option of freezing your coverage for a certain amount of time however, you should check with them about this.

      • I haven’t paid my car insurance in two months and it just canceled July 7th..i just got with a new insurance company today. Do you think my license will be suspended or will i have to pay an uninsured motorist fee

  4. The primary question on the headline is (what do you do when you -cannot- pay your insurance?
    The answer was a series of laws, suggestions the arguably fit the asked subject, and a chance for you to get a quote for something you just said was near unaffordable.
    That a make you want a qoute!

  5. Insurance is a scam. Any situation that requires insurance has always been crooked. When they required automotive insurance by law it needed to be regulated big time. Now my rates go up because automobiles are overpriced or I am safeguarding against every jerk going through the change of life who buys and drives a 60,000.00 vehicle. Ridiculous!! People have taken a hit since 2008. You want to make America great again? Work with people toward alternatives.

  6. I live in Austin, tx. I went to Italy to visit my daughter (Who is in the Army). I did pay my auto insurance bill since I would not driving while in Italy. I was in Italy for 60 days. I got back to Austin and went to my auto insurance and reapplied. After 2 months, I was cancelled due to “You did provide acceptable evidence of automobile liability insurance in force within 30 days of the date of your application”.

    So, my question is, do I need to have auto insurance when I am driving? And, why has my auto insurance cancelled?

    Thank you,


    • Armando@4AutoInsuranceQuote

      Hello Matt,

      Your post is not entirely clear, but I’m going to assume you mean that you didn’t pay the insurance while you were gone and the policy lapsed. Insurers will generally allow a grace period of 10-30 days after the due date to submit your payment and avoid cancellation of the policy. If the policy does lapse / cancel, then it’s at their discretion (underwriting review) whether to renew your coverage or not, at which point you would have to pay for the back-premiums owed. If you allow your insurance to cancel / lapse then it could be difficult and much more expensive to become insured again. States law differ, Texas requires drivers to carry liability insurance. Your insurer may have notified the state when the policy canceled and the state may freeze your registration, preventing you from renewing it, until you provide proof of active coverage. If you are caught driving without insurance, you could face stiff penalties, in addition to the risk you’d be taking and creating for other drivers.

  7. I have been notified by a collection agency that I have to pay them for canceled car insurance . I am on disability and was having a hard time paying it. Recently settled for state required liability insurance. How do I handle the collection agency…

    • Andrew@4AutoInsuranceQuote

      It’s normal for auto insurance companies to turn unpaid bills over to collections agencies. When you cancel an insurance policy, the unused part of your policy needs to be settled. This could mean getting money back, or it could mean owing money.
      At this point, you’ll need to talk with the collections agency and explain your situation. If you can prove that you’re on disability and on a fixed income, then you might be able to work out some type of longer-term payment plan with them. They should be okay with something like that, as long as they’re guaranteed the money.

  8. I’m 26 about to be 27. I live in CA. I have a 675.00 2017 20 percent interest car payment across 6 years. And full coverage is required and just went from 200 to 360 a month due to my first at fault minor accident that left my left fender and number dented and their paint scratched. I’m a full time student. And I can’t affird to drive my car. Help

    • Hi. I took my car insurance out on a provisional license and originally on that license my insurance was £116 a month. As soon as I changed it to a full license it went up too £350 a month. Which I couldn’t afford. I got another quote with the same company and my car insurance came in at £156 a month so I told them I wanted too leave and open a new account with them and they wanted a cancellation fee of £300. I can’t afford my car insurance and I can’t afford too leave either.
      What can I do?

      • Andrew@4AutoInsuranceQuote

        It might be worth it to get a quote from a different insurance company. If the different company comes back with a quote similar to the 116/month that you were originally paying, then you should be able to afford to leave. If you still can’t quite make the payments work, then you at least have a target goal of saving money each month until you can switch car insurance companies. It’s worth it to save money for a few months and then switch car insurance companies if that will save you money in the long run.

    • Andrew@4AutoInsuranceQuote

      At this point, you basically have two options. The first option is to shop around for a cheaper car insurance company. Some companies penalize accidents and violations more severely than others, so it’s at least worth a look around. Your second option would be to sell your car and buy a cheaper older vehicle that would have lower monthly payments and lower auto insurance rates. While that might sound severe and drastic, you don’t want to be further in debt trying to make payments on a new car. For now, while you’re a full-time student, it might be best to save the money and drive an older car.

  9. Hello,

    Thank you for this article. I was wondering: last year I got a speeding ticket which i went to court for to pay off, and they gave me a deadline to take traffic school by. I, being the dunce that i am that forgot to write it down in my calendar, forgot to take traffic school (I know, my fault), and I just got a bill from my insurance that’s nearly $1,400 for my insurance, as a point went up.

    I’m of course very stressed out and being a worker at an entry-level job who just moved out from her parents’ home on her own, I just don’t have the kind of money to pay this every month.

    I heard from a coworker that I could simply choose not to pay this bill and instead shop around for new insurance, but I’m guessing that can’t be the best idea, since there has to be some repercussions for not paying your insurance bill and shipping around.

    Thoughts on my coworkers advice? And Do you have any recommendations to avoid having to pay this amount every month?

    Thank you!

    • Andrew@4AutoInsuranceQuote

      Both you and your coworker are correct to different degrees. It’s true that you can cancel your current policy and switch to a new company at any time. However, just not paying a bill doesn’t mean that you don’t owe the company money.
      It sounds like you need to switch insurance companies to lower your bill, although you might not save tons of money since you’re a young driver with at least one speeding ticket on your record. When you do switch, you’ll need to call your current insurance company and cancel it. At that point, they’ll let you know how much you owe to close the account if anything. If you do owe and don’t pay, then they’ll turn your bill over to a collections agency.

  10. What if I cannot afford car insurance due to 2 speeding tickets from last year. The car is financed. Can I just park it?

    • Andrew@4AutoInsuranceQuote

      If your car has financing, then the finance company will require insurance on it since they still own it. And just parking your car and not using it doesn’t affect the requirements to carry auto insurance, both from the state and the finance company.
      The first thing you can do is look at your coverages and deductibles to see if you can save money by having higher deductibles. If you still cannot afford auto insurance, you might want to consider either trying to refinance your car to lower those payments, or even consider trading in that car for an older car with lower monthly payments and lower insurance rates.

  11. They raised my insurance from 110 .00 month to 596.00 month I called and told them I was not paying so they cancelled me I have received a note they turned me over to collection agency how can they do that when I was paid up till that month

    • Andrew@4AutoInsuranceQuote

      The only way that an insurance company can turn your bill over to a collections agency is if you do actually still owe money. This gets tricky with monthly payments because you were under the impression that you paid for the upcoming month. However, sometimes it’s difficult to know that for sure, especially if you’ve been with your company for a while.
      The point is, the insurance company can’t make up these numbers and turn your bill over to a collections agency unless they have a valid reason for doing so. You can always try to fight it or at least call the insurance company to get some more information, but you’re probably going to have to pay that final bill.

  12. Just don’t pay for insurance, if you are a responsible and safe driver let others who are unsafe pay for insurance. It is your money nobody can tell you how to spend it. Keep your registration and license plate up to date, and obviously drive safe

    • Andrew@4AutoInsuranceQuote

      There’s at least a couple of problems with choosing not to pay for insurance. One is that it’s a legal requirement in every state except for New Hampshire and Virginia. If you don’t have insurance, then you can lose your driving privileges. And you can’t keep your registration and license plate up to date without proving that you have insurance.
      No matter how safe a driver you are, accidents can and do happen to everybody. Relying on the other person’s insurance to pay for your damages makes the risky assumption that they also have insurance. Therefore, you could be left with tens of thousands of dollars, if not more, in injuries and bills that you are responsible for.

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