What if I’m Late With My Auto Insurance Payment?

A late auto insurance payment is not the end of the world but it may result in increased insurance rates. Late payment policies on your auto insurance are at the discretion of your insurance provider, but most companies offer a late car insurance payment grace period. You may be charged a late fee if you're late with your auto insurance payment. We recommend calling your insurance agent if you're going to miss a payment to avoid any insurance policy cancellation.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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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. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Aug 18, 2021

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Sometimes it can feel like you have countless different bills, repayments and other fees going out of your account every month. There’s the gas and electricity, your rent or home-loan repayments, tax, water, Netflix, mobile bill, landline rental, TV… it’s almost impossible to keep track of.

And if you drive, then the number of these bills and payments goes up exponentially. Now you have to consider the cost of the car, services and maintenance, fuel, road taxes, and insurance coverage. Maybe you have parking too…

With all that in mind, it can be easy to find yourself missing an auto insurance payment, in which case you may be concerned that you are no longer insured, or that your bills are going to go up badly.

So, let’s take a look at what really happens.

Finding Late Payment Policies on Auto Insurance

As ever, the policy pertaining to late payments on your auto insurance is very much at the discretion of the auto insurance company. However, there are also certain industry standards and of course they can’t just decide to bill you a thousand dollars without prior warning!

The best way to find out what the particular penalties are for a late car insurance payment in your case, is to look into the terms and conditions of your policy. When you took out your car insurance coverage, you were likely sent a hugely detailed document that listed all of the different terms and what you could expect.

This information probably includes details of how late payments are handled and how renewals will be dealt with. Take some time to comb through this, and you should find the information you’re looking for.

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General Advice

Speaking in generality, however, it is common for most auto insurance companies to issue some kind of fee for late payment. This can range in amount, but most often, it will be somewhere between $10-$15. It could be more, but it will always be reasonable as there are laws protecting you against astronomical fees, even when they’re in your contract. This fee might be billed to you separately, or it might be added to your next bill – but you should always get notice of it.

If this is the first time that you have ever been late paying your bill, then you might find that the company or auto insurer is willing to be lenient and give you a grace period. Try giving them a call and discussing your situation with them. You might find that they let you off and refund the amount.

If you continue to miss payments, then there is a chance that your contract will be cancelled. If this is the first time or the second time, then it likely won’t come to that. However, if you have gone a while without paying, then you might find that eventually the policy is terminated. Another thing to keep in mind is that the company may not have to honor their commitment if you have an accident and need to claim.

Again, all of this information should be in your contract. In most cases, you’ll have ample opportunity to pay and shouldn’t lose your policy. If your policy is less than 60 days, however, then you’ll be more likely receive a cancellation notice.

Repercussions

There may be some repercussions for late payment that go beyond your fee however.

One issue, is that your policy might be ‘non-renewed’. This simply means that come to the end of your contract, the policy won’t be automatically renewed and you might not be given the option to renew it either, or it might be a lot higher.

You’ve shown yourself to be somewhat more of a risk in the eyes of the insurance company and thus they will be less desperate for your business.

This can also affect your standing with other insurers. Insurance companies talk and if you have a history of late payments, then you might find that your fees go up significantly. This is especially true if your policy is cancelled by your insurer – not having continuous insurance from a single company can be a negative factor in the rating strategies.

Worst of all, this can risk harming your credit score. Your credit score is made up of all of your previous loans, bills, and credit. It is an indicator of your general ability or inability to pay back your financial commitments.

If you have missed lots of payments, then this can hurt your score and that’s what all future financial institutions will look at. That means that it could have a negative impact on your ability to take out loans, your ability to get products on finance, on other kinds of insurance – even on mobile phone bills!

But this is only likely if you miss multiple repayments. One late payment is likely to have much of an impact, if any.

How to Avoid Late Payments

Avoiding late payments on any kind of agreement is an important way to keep your financial records in good stead.

One way to do this, is to make sure that you always have enough money in your accounts with a little bit extra there for good measure. That means you should have a buffer, so that if a payment is more than expected or if you have another unexpeceted outgoing, then you’ll still have enough set aside.

Another tip is always to check your accounts. When we’re worried about finances it can be tempting to bury our heads in the sand and not look – but of course that’s a big mistake!

Finally, the best strategy of all is to consider getting an arranged overdraft. This lets you go into minus figures and only charges a very small amount for the convenience. It also doesn’t affect your credit score. That way, if a loan comes out and you have $0, then it will still get paid and you’ll have plenty of time to make up the difference. Overdrafts can be anywhere up to $2,500 and even more!

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