Sometimes life throws you a curveball – you lose your job, are hit with a big medical bill, or need to pay for legal fees. Whatever the reason may be, you suddenly cannot afford to pay for your car insurance premiums and you need to know what your options are. Fortunately, you’ve come to the right place.
Unfortunately, auto insurance companies are not that flexible when it comes to helping out people who are struggling to pay the bills. If you are unable to make payment for your premium by the due date, your auto insurance policy will be cancelled on that day. In the event your policy is cancelled, you will officially be uninsured.
Other types of insurance, like life insurance, often have what they call a “grace period.” A grace period is the period of time after your premium is due in which the policyholder can make a payment without losing coverage. With car insurance, however, there is generally no grace period to speak of. If you miss a payment, your policy has therefore lapsed.
In a lot of places, you the penalties for lapsing in auto insurance coverage can be quite severe. Fines from the police and/or license suspension are just two of the many bad things that can happen to you if you are caught driving with lapsed insurance coverage. Often times, the only way to avoid these penalties is to hand over your license plates and registration to the DMV/RMV in your local jurisdiction.
The most important thing in the event of a lapse, however, is to keep your vehicle off the road. It’s obvious that you should not drive your vehicle without insurance coverage, but did you know that you cannot even park your car on public roadways without it being registered? If you do not have a driveway or private spot to park your vehicle in while you wait to renew your coverage, you will need to find other arrangements.
Unfortunately, if you try to turn your car insurance policy back on after a lapse in coverage, you may find that your insurance rates have increased. Insurance companies use multiple calculations to determine your risk to the insurer, and one of the factors they look at is whether or not you’ve had a record of not paying your bills.
If your car insurance policy lapses, you will have to then reapply for auto insurance coverage. Affording to recent studies, drivers who let their policies lapse ended up paying 8.8 percent more for car insurance than they originally paid. The reason or this is because auto insurance companies consider delinquents and non-payers to be in a higher risk group.
The best option, therefore, is to never let your insurance policy lapse in the first place. If you sense financial hardships coming on, your best option is to drop some auto insurance coverage to a level at which you can afford. Check out the state minimums for auto insurance coverage to see how much auto insurance you can get away with legally in your state. Often times the bare minimum, basic coverage option is quite affordable. While not ideal, it can be used in the short term until you are able to get back on your feet.
Another option is to start lowering your auto insurance rates today. It’s always better to be safe than sorry, especially when it comes to something that could be as expensive as a lapse in auto insurance coverage. If you want to lower your insurance rates, there are a few different things you should consider doing:
Most personal finance experts agree that the best way to lower your auto insurance premiums is to shop around for rates from other insurance companies. Often times the only way to really see a substantial drop in premiums is to switch your insurer. To begin, use a tool like the one on the top of this website to check for quotes from different insurance providers in your area.
As we briefly touched on before, it might make sense to start dropping some unneeded coverage. If your car is older and not worth that much money anymore, you should consider dropping collision and comprehensive coverage. By doing so, you will be able to save a big amount on your monthly bill. Just remember, however, if you drop these coverage types, you might be on the hook for paying for your own auto repairs if something happens to your car.
If you raise your deductibles, you will see your premium rates drop. Although the drop will not be significant, it might help just enough to get you to the point where you can afford to make your bill payment. Be forewarned, however, if you are involved in an accident and need repairs done to your car, you will be forced to fork out more money out-of-pocket. If this is a risk you are willing to take, then by all means – raise your deductibles!
One of the better ways to lower your auto insurance rates is to drive a car that is cheaper to insure. When it comes to insurance rates, not all cars are created equal. Some cars, for a myriad of reasons, are more expensive to insure than others. If your car make and model happen to be the type that demands a high premium, you might want to reconsider what car you drive.
Remember, in the United States, driving without auto insurance is illegal. The penalties for letting your auto insurance lapse can also be quite severe. Therefore, it’s always advised to maintain a good standing with your auto insurance company. Call up your insurance agent today to discuss ways in which they can help you save more money on your insurance premiums.