Non-Payment Cancellation and the Effects on Your Car Insurance Premiums
Non-payment of auto insurance usually lands one of those harsh red stamps on your record. Think of it this way: You subscribe to a Thing. The Thing costs $25 a month, on the same day every month. You use the Thing every month you pay, until one month, you forget to, funds are low, or your card is declined. Subsequently, the Thing stops happening for you at the end of the current cycle. Now you have no access to the Thing until you decide to pay the providers.
Like every other service out there, car insurance operates in the exact same way.
If you fail to pay your car insurance premium when due, the carrier will cancel your policy effective on the 30th day after they have given you notice.
It’s as simple as that. If you receive a registered letter of cancellation from your auto insurance company, pay that within those 30 days, and your policy won’t be in jeopardy.
Late Fees & Earned Premiums
In most cases a missed auto insurance payment will cost you a late fee, as long as you pay it right away. If you pick up a new car insurance policy before paying it, please remember that you will still have to pay what is owed for the time you were covered by your previous carrier. This is called earned premium. The insurance company can bill you for each day you were covered without paying. This can add up fast.
Avoid If You Can
If you have been cancelled for non-payment, getting reinstated isn’t difficult. Just pay the premium and you’ll be back on track. However, like overdue cellphone bills and expired deli meats, your best interest would be to not get cancelled in the first place. Besides interest and bad stomachaches, it’ll also affect your credit, which can then, in turn, affect future premium rates.
Also, keep in mind that should friendly neighbourhood cops stop you, and you don’t have proof of coverage, you’re also looking at potential traffic violation charges and fines. Depending on how friendly they are, of course, and the astro-alignment that determines the scale of your misfortune that day (kidding).
Generally speaking, cancellation of car insurance for non-payment will adversely affect your car insurance premiums for 3 years.
If this has happened to you, don’t worry. Take a deep breath. It doesn’t necessarily mean you are careless or stupid. Shit happens, and often to good and well-intentioned people such as yourself (maybe?). The best first step is to get some solid, professional advice, before you hit the ground running (‘cuz, you know, you don’t have car insurance now and that means you aren’t driving-right?). Sweet Lemons offers cheap options and happens to have some awesome pros who can analyze your situation. They’ll help you make a game plan, and get you on track to regaining your low insurance premiums.
Of course, if you want to stay ahead of the game, you could just cancel your insurance before they have a chance to. Or even better, just don’t buy a car. You might have to move to a central location and then deal with inflated rent prices. But at least worrying about non-payment cancellation won’t be an issue anymore, right?
(Thank you for tuning in to today’s segment of Bad Life Advice. See y’all next time).