Penalties For Making A Late Auto Insurance Payment

When making a To-Do list, be sure to write at the top, preferably in red ink, the capitalized words "MAKE AUTO INSURANCE PAYMENT." Otherwise, if you miss the payment date, you'll face both short- and long-term repercussions.

 

Penalties for Missed Insurance Policy Payments

The rules concerning a missed auto insurance payment will depend on your state and your provider. In most instances, however, you'll find there is no grace period. If you miss your insurance payment's due date your coverage will immediately terminate at 12:01 a.m.

Some auto insurance companies, by law, will attempt to notify you before legal action goes into effect. In Nevada, for example, the DMV mails a letter requesting car insurance verification. If the driver fails to respond or cannot provide proof, the DMV then follows with a certified letter informing the driver that his or her driver's license has been suspended. Subsequent driver license reinstatement fees can go as high as $250.

License suspension is just the tip of the iceberg regarding penalties for lapsed car insurance. In addition to the possible suspension of your driving privileges, you, depending on the laws of your state and the policies of your car insurance company, may also be penalized with:

• Late fees. In New York, for example, the state charges an $8 per-day late fee for the first 30 days, $10 per day for the next 30 days, and $12 per day for beyond 60 days.

• Jail time if you're involved in a car accident while your car insurance has lapsed.

• Driver license or driver registration reinstatement fees.

• A dramatic jump in insurance rates. Allowing your coverage to lapse will automatically classify you in the car insurance world as a "high risk" driver. Accordingly, you'll be saddled with "high risk" driver rates.

If you're unsure of your state's grace period policies, contact your state's insurance department. Or, if you know your auto insurance premium is going to be late, contact your provider about possible options to help limit the penalties.