Have you ever been late on a bill payment simply because you forgot to send in your payment?
While being just a few minutes late on a credit card bill or a car payment will only result in a small late fee, your forgetfulness can cost you a significant amount of money if you don’t pay your car insurance.
Forgetting to pay your car insurance bill can be a very expensive oversight that you should take the proper steps to avoid.
Instead of just being assessed a late fee by your insurer, your coverage will terminate for non-payment. This leaves you at risk of being penalized and at risk of having a crash with no protection.
Since making on-time payments is a must in the industry, here’s what you should know about your due dates:
Understanding How Auto Insurance Premiums Are Billed
Many of the services that you pay for monthly are billed after the service has been rendered. If you look at your cable bill or electric bill, you’ll see that you’re paying for the amount of electricity or the media that you used last month.
This is because the service provider has to measure your usage and then bill you based on the quantity after the fact.
Insurance premiums don’t work this way because the insurer knows how much coverage you’re paying for from day one. Since the carrier is affording you the same coverage limits for the entire term, it’s easy to bill you by the month or by the policy period.
Since you wouldn’t likely pay for coverage you didn’t use after it was afforded, insurers bill you in advance for the protection so that you can keep it.
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How Your Payment Plan Affects Your Due Date
A majority of insurance providers will give their clients options when it comes to paying their coverage.
You still have to submit a payment, but it doesn’t always have to be for the full amount due on the plan. Knowing how the payment plan that you choose will affect your due dates is critical when you’re setting up your policy. Here are the most common options:
- Monthly – you must submit your payments on the same day of each month
- EFT – your monthly payment will be deducted from your account the same day each month
- Quarterly – you must submit your payments once each three months on the same day of the month
- Semi-annually – you must submit your payment every six months by the due date on the renewal paperwork or the policy will expire
- Annually – you must submit your payments once every year before the expiration date of your current policy or coverage will lapse
What day of the month is your insurance due?
Many companies will bill you and set the due date as the same day of the month when your policy took effect.
This means that if you started your insurance on the 15th and you pay quarterly, your payments will be due the 15th of the month every three months.
Some companies will allow you to choose which day of the month you want your payments to be due if you set up automatic bill pay.
If you know you that you’re paid at the beginning of the month, you can choose to set your due date to a day that’s most convenient for you.
What happens when you don’t pay your auto insurance by the due date?
If you pay your premiums past the due date, there’s a chance that you may be given a grace period. These grace periods last between 1 and 30 days depending on the carrier.
If there’s a grace period, your coverage won’t lapse. If there isn’t, the policy will terminate because you failed to make your premium payments.
If you allow your coverage to lapse, you could pay the price in the form of penalties, DMV-assessed fees, and court judgments.
Don’t let your lapse of judgment lead to expensive consequences that could have been avoided if you would have organized your budget so that you knew your insurance payments.
If you don’t have insurance, now is the time to get quotes for coverage. Use the Internet to compare premiums through several carriers and you’ll be on the way to affordable coverage.
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