With thousands of different bills to pay, it’s easy to let one slip your mind and get the payment in late. To understand the penalty for paying your auto insurance late, you have to read the terms and conditions of your policy. Yes, this information is tedious, but it does include important details about your policy. For a brief synopsis of what we would consider typical consequences of a late payment, read on.
In general, if you were only late for a couple of days, the worst case scenario would be a late fee charge. This fee can range in amount, but usually starts around $15.00 and can go as high as $50.
If this is your first time paying late, give your insurance company a call and explain yourself. Be polite, and they will most likely let you off the hook and refund the amount. Too many of us don’t do this and just pay the late fees even if it is our first time, just like we don't ask for discounts.
If you continue to miss payments and exceed your insurance company’s grace period for late payments, then there is a chance that your policy could be cancelled. Please be aware insurance companies take late/non-payments very seriously. Of course, every insurance company has a different policy in regards to late payments, but sometimes all it takes is a couple of missed payments to result in cancellation of your policy. Yes, some can be ruthless.
Furthermore, at the end of your contract, you might not be given the option to renew your policy. The insurance company considers you a risk, so they will be less eager for your business. If they do give you the option of renewing, be ready to pay more. Additionally, if your insurance has expired from nonpayment, expect to pay higher insurance premiums for at least six months. Fair game.
Yes, your credit score will take a hit. Sure, you could get your auto insurance from a new insurer, but outstanding payments will go into collections. This will impact your credit rating, which is a factor that could impact your ability to get insurance in the future.