What Happens When My Car Insurance Is Canceled Due to Non-Payment?

Insurance payments are a regularly recurring expense. If you default on your payments, it can lead to your car insurance policy being canceled for non-payment. There are many reasons why you could end up defaulting on your insurance premium, but these reasons do not control how your insurer will react. Canceled insurance is one-way insurers can respond. The other way is increasing your premium. These are just some of the repercussions of having your car insurance canceled.

In this article, we will explain the effects of defaulting on your car insurance payments and some ways you can address the problem with your insurer.

Effects of Canceled Car Insurance

There are varying effects of having your car insurance canceled. Here are some of the significant impacts this could have on your finances.

  1. DMV Fees

Some states in the US will fine you for missing your insurance payments. These fines could be daily charges that quickly rack up to being substantial amounts. There could also be increased penalties depending on the severity of the default. The penalties are usually for the duration of the insurance lapse.

  1. Lower Credit Scores

Missing your payments could negatively affect your credit score. If your debt is passed unto a collection agency, it reflects on your record, and your credit score drops.

  1. Higher Insurance Rates

Insurers do not look favorably on individuals who are unable to pay their premiums. If you default on paying your premiums, you will have a hard time getting cheaper premiums in the future.

What to Do If You Miss a Payment

If you miss a payment, there are a few steps you can take to try to avoid having your insurance policy canceled. Here are some tips that can help you.

  1. Contact Your Insurer

If you believe you will default on your premium, contact your insurer before and alert them of the fact. Insurers have different methods of handling late payments. Contacting your insurer will allow them to guide you on the next steps and possibly help avoid having your policy canceled. It is always better to handle possible difficulties with paying by being proactive and honest with your insurance company.

  1. Utilize Your Grace Period

Insurers typically have a grace period where non-payment causes no harm. This period usually lasts a few days. If you manage to make your premium payments within this grace period, you are in the clear. This period differs between insurers. It would be best if you found out the exact number of free days you have.

  1. Apply for New Coverage

If you feel your current plan is more than you can handle, you should apply for a cheaper coverage rather than just defaulting on your current plan. Getting a more affordable plan will be easier on your account, and it will help you protect your credit score.

Getting insurance for your vehicle is essential, but defaulting on your payments could get you in trouble. For assistance with car insurance and other related questions, contact the experts at VGW Insurance in Texas, today. We are ready to assist you with all your coverage needs.