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

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Rachel Bodine graduated from college with a BA in English. She works as an associate editor and writer for for over a year and enjoys creating content that offers expert advice on car insurance topics.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs...

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Reviewed byLeslie Kasperowicz
Former Farmers Insurance CSR

UPDATED: Mar 13, 2020

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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).

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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’.

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