The insurance company could cancel the policy if you don't take care of the matter quickly. Typically, a car insurance company provides a grace period for late payments and continues the coverage during that timeframe. If you still haven't paid by the end of the period, the company sends a delinquency notice with a deadline for payment. After the deadline passes and you still haven't paid, the insurer may cancel the policy.
Grace periods vary by insurance company and by location, but they can be as little as 10 days. State laws dictate the minimum length for grace periods and insurance companies must abide by those rules.
Avoid car insurance cancellation
Avoid cancellation if you possibly can. A canceled policy provides no protection and leaves you wide open for financial catastrophe. You could be on the hook for thousands of dollars in medical bills and property damage if you cause an accident.
The insurer might take you back after a lapse due to nonpayment, but you'll need to reapply for coverage to reinstate the policy. You might have to pay a higher premium or have conditions placed on the policy. Even if you shop for auto insurance from other carriers, you likely will face higher car insurance rates. Cancellation for nonpayment indicates risk--a red flag for insurers and a reason to charge more for coverage.
If you're late on a payment, contact the insurance company and send a payment immediately to avoid cancellation. Next, analyze what caused the late payment. If the once-every-six-months schedule is causing cash-flow problems, consider rearranging the payment schedule to smaller, monthly payments. Or, if it's just a matter of remembering to mail a check, arrange for an automatic payment with a credit card or automatic transfer from your checking account.
For more, see "Hasta la vista, baby: 5 reasons your insurance will be terminated."
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