Car insurance is a requirement if you want to drive a car. But what happens if you don’t pay your car insurance?

Car insurance is expensive. And with a whole host of other bills to pay, you may be tempted to let your auto insurance bill sit for a bit and put the money toward other things. 

If this happens, or you just forget to pay your bill, what happens? Are there penalties you’ll have to pay? If so, what are they?

Will your coverage get cancelled immediately? Can you keep driving?

Those are a lot of questions and, below, you’ll find the answers so you know what to expect if this situation happens. 

What Happens If You Don’t Pay Your Car Insurance?

So first things first. There is no need to panic if you have missed a payment to your car insurance recently. Coverage for your vehicle will not get immediately cancelled. 

If you have missed a payment on your car insurance, there is a grace period. A grace period is a short amount of time given to you to pay for your late premiums. 

Depending on the state where you live, as well as your car insurance provider, your grace period may last between 10 to 25 days. If you have not paid during the grace period, then most likely your provider will cancel your policy. 

You will receive a reminder to pay your premiums in case you have missed one. Alternatively, some car insurance companies may leave this in the hands of collection agencies. 

Collection agencies will constantly remind you to pay your bills. Another scenario is that your car insurance premiums may also increase. 

Possible Penalties

There will be penalties, or at least negative consequences, if you do not pay your car insurance premiums. But exactly what will happen can get a little complicated as penalties for not paying car insurance premiums differ. 

But typically, if you have not paid your car insurance premiums within the grace period, your policy will lapse. What that means is that you will lose your coverage. At that point, legally, you will not be able to drive.  

But there are other issues you can face besides that. Now let us say that your previous car insurance policy was cancelled due to you not paying down payments. This could negatively affect your credit score. 

And if you apply for a new policy, a potential insurer will see a bad payment record and may think twice about insuring you. Your potential insurer will see you as a risk. And in insurance, the higher the risk, the more you pay. 

But worse things could also happen such as losing your registration or even your car. If the DMV finds out that your insurance is cancelled, they will likely revoke your car registration

In the case where you are leasing a car, or are loaning your vehicle, your lender will ask for proof of insurance. If you have failed to show a form of insurance, then your lender is legally entitled to take back your vehicle.

So make your car insurance payments on time as much as you can!

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