Sometimes, life just gets in the way. Between work, everyday activities, and weekend plans, there are often items that get pushed aside and promptly forgotten about. If you’re fortunate, those overlooked things are small and inconsequential. Other times, they simply aren’t.
Late fees and penalties are common expenses associated with past-due payments. But are those the same for car insurance? You may have heard a rumor circulating about that there’s always a grace period. Wouldn’t that be lovely? An additional period of time that is granted to you, just in case of your forgetfulness, would be ideal. It turns out there may be such a thing. Here’s the breakdown.
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What Is a Grace Period?
A grace period is an additional length of time given to an individual to make a payment. This could apply to credit cards, phone bills or even – you guessed it – your car insurance. If you missed a bill payment by a certain period of time, say just a day or maybe a few weeks, you may not have to face consequences. Essentially, a grace period is a length of time that a payment will be accepted after an actual due date. During this period, you won’t face consequences like late fees or coverage cancellations.
Rumor or Not?
Here’s an answer you probably don’t want to hear. It depends. Just because your electric company has a grace period, doesn’t mean your car insurer will. That said, depending on your state and carrier, you may have been granted an automatically applied grace period.
Auto insurance providers have the legal right to stop your coverage as soon as your policy expires. That’s why it’s incredibly important to stay on top of your insurance policy as driving without coverage is illegal in most states. Furthermore, if you miss a monthly coverage payment, your insurance may lapse. Having any type of car insurance lapse can lead to costly consequences and can cause premium increases later on.
Depending on your state and auto insurance provider, you may have a grace period if you pay your premium late. Typically, the grace period lasts between a week and a month. Chances are if your payment is over a month late then your policy may have already been terminated. Avoid this altogether by paying for your policy on time.
It’s good practice to know if your car insurance provider has a grace period before signing on. Sometimes, it’s the small extras that can help you make a decision between two auto insurance providers if the rates and coverage are comparable.
How to Prevent a Policy Lapse:
There are many easy ways to prevent a lapse in coverage. One option is to use an EFT, or electronic funds transfer, as they are convenient and simple to set up. Your payment will be automatically deducted each month. Often, this bill pay method even comes with a discount. In addition, many providers have gone paperless in multiple formats. Online payments can be an efficient, quick way to pay your premium, and in some cases, you can even find your insurance identification card digitally. You can set up automatic deductions each month or many drivers choose to pay their payments in 6-month or yearlong terms. Prepaying can be a great option for those who are forgetful. Just be sure to set a reminder for when your policy is due to expire, as even though providers will likely make contact attempts, it’s best to be prepared. Before you agree to renewal, it’s also helpful to remember to check around as you may be able to find more affordable options elsewhere.
Photo Credit: kizzzbeth