How Long Will It Take For Insurance To Be Cancelled After You Stop Paying Your Bill?

Driving without car insurance is illegal and can leave you at risk of being sued and having to take out huge loans to cover costs incurred by your actions.

The purpose of a car insurance company is of course to provide funds in case you should need them. You pay a monthly fee based on numerous different factors, including your age, how often you drive and your experience – all of which should paint a picture of how likely you are to have accidents in future. If you are in an accident that is your fault, the insurer will then pay out a set amount to cover the costs faced by the other party, thereby ensuring that you don’t need to dip into your personal funds. Insurance companies remain in profit because the amount they receive on a monthly basis adds up to more than the amount they pay out – and this is all carefully calculated based on statistics and the information you provide.late auto insurance bill

For all these reasons though, a car insurance company won’t want to pay out for an accident if the customer has stopped paying their insurance. If you stop paying your monthly, quarterly or yearly costs, you are no longer profitable for that company and any money they pay you will be a loss to them.

Thus, they will cancel your policy and you will find yourself without insurance. The penalties for being caught driving at this point are severe and especially if you cause an accident. In fact, if you are caught driving without insurance, then you may even be charged as though you were at fault when you were actually the victim!

What Happens If You Stop Paying For Your Auto Insurance

While we all know that it is important to keep paying car insurance, unfortunately it is sometimes easier said than done. Many of us face financial strain that goes beyond our ability to pay and in some cases, this might mean that a payment bounces or is rejected by our bank. This can even happen without us being aware of the situation we are in!

Fortunately, if that should happen and you do indeed miss a payment, then you won’t normally find that your payment is cancelled right away. Instead, you should be notified by your car insurance company and be given the opportunity to make the payment. This is a legal requirement in almost every state, so you should never find that your insurance policy just ‘stops’ without you being aware (as long as you remember to check your post!).

Usually, once you have missed the payment, you will be given notice that you must pay within a set period or risk having it cancelled. The amount of time you are given will normally vary depending on the insurance company (check your contract) but will often be between 10-30 days.

If you still haven’t paid your insurance company after this time though, then the policy will be cancelled. Following this, the car insurance company will then be required to inform the DMV. The DMV will then likely suspend your driving license, revoke the tags and registration on your vehicle and potentially even impound the vehicle (if you are pulled over).

Some Car Insurance Tips To Be Aware Of

If this should happen to you though, then many insurance companies will give you the chance to renew your policy and then pay to backdate it for the period that you missed.

Backdating insurance is illegal in many cases, but if you are simply ‘filling a gap’ that you missed, then you might find that the company is legal. You will need to sign a form in this case though to state that you had no accidents during the time in between your policies. What’s more, is that you will normally only be able to do this within 30 days after the policy has ended. And of course, the insurance company is still within their rights to reject your business if you seem unreliable as a customer.

Another tip is to be careful when changing driving insurance providers. Some people will make the mistake of cancelling their old policy before they have secured new insurance. This can sometimes lead to an unintentional gap between coverage again and once again mean that you might be driving illegally. To prevent any chance of this happening, make sure that you find alternative insurance first and then go ahead with cancelling the old insurance. You might even find that your new provider takes care of that for you.

How To Avoid Letting Your Car Insurance Lapse

Driving without insurance is a serious crime and you can find yourself in a lot of trouble if you let your policy lapse. To be safe, always keep a separate account for your essential bills and pay into that at the start of every month. Another good tip is to keep some extra money in there to ensure that you have a ‘rainy day’ contingency fund. An overdraft agreement with that bank can also be a good move.

Better yet though? Simply pay for your car insurance in advance. If you buy a year’s worth upfront then not only will you stop having to worry about it each month or each quarter, but you will also be able to make huge savings by effectively buying ‘in bulk’.


  Comments: 8

  1. My car insurance was cancelled because I didn’t made a payment on the date line.
    Now Infinity Insurance Co. Wants me to keep paying for the total balance for the next five months. All this while I have my insurance policy cancelled.
    I decided to get new company Paying less.
    Infinity auto insurance is OK. Is their agents who prefer to do harrasment to unhappy customers.

    • Andrew@4AutoInsuranceQuote

      It’s good that you were able to find a new insurance company where you can make payments that you can afford. The only thing that I would make sure you do is double check that you don’t owe your old company any more money. If you do, it’s for insurance that you used but didn’t pay for, meaning that the policy was active but they had not received any money for it. If you do owe them money but haven’t paid them, then they will turn your bill over to a collections agency. It’s best to find out from them what you might still owe and if you can make payment plans on that.

  2. My insurance is set up for auto pay through my bank and I don’t have enough money in my account what will happen

    • Andrew@4AutoInsuranceQuote

      If you don’t have enough money in your bank account and your insurance company tries to pull their payment, then they won’t be able to. The transaction will be denied and the company won’t be able to take any money at all. Typically, they won’t try again, so it will be up to you to make a manual payment as soon as possible before your insurance policy cancels for nonpayment. The company might also want to take you off of automatic payments if this happens more than once. But if they don’t receive their money within a couple of days after the failed autopay, then they’ll send you a cancellation notice unless you pay manually.

  3. Merri Anderson

    My insurance didn’t bill my bank account like they had been doing. I had no knowledge of it. I had an accident and now I have no car, no license, and no job. The insurance company keeps telling me they see the mistake and will get back to me. its been over a year. what do you suggest?

    • Andrew@4AutoInsuranceQuote

      Hi Merri,
      Since it’s been a year, you probably can’t count on your insurance company to do anything else, even though they said they would check into it. If you don’t have a car, then you probably don’t need auto insurance, although if you ever drive a car then it doesn’t hurt to have a policy. Your insurance expiring wouldn’t have an effect on your license expiring, however. You will need to reinstate your driver’s license before you can get another car insurance policy. But considering how your previous company never got back to you, perhaps you should look into a different car insurance company when you’re ready to buy a new policy.

  4. Hello, I was paying for liability car insurance from a month to month payment option. No contact about a promise to stay with you for 6 months or whenever, yet my rates from other insurance companies went up. I was paying month to month because I was moving and need the car to help make it easier. When I moved, I was able to get a ride to work everyday and ended up not needing to drive. So I decided to save money by, no longer paying for the car insurance since I was not driving. What gives a company to raise my rate if I didn’t fail to pay? The company and I didn’t have a contact plan for a monthly promise to pay.

    • Andrew@4AutoInsuranceQuote

      Hi Dylan,
      It’s not real clear what happened with your billing situation, but it is normal for insurance companies to raise rates, regardless of whether someone pays on time or not. Rate increases happen for a number of reasons, especially when the insurance company has had more losses in a year than they brought in with premium money. It sounds like in your case it was simply a rate increase, which can be frustrating, but also happens quite a bit.

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