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There are moments in your life where you have to make choices. Sometimes your budget dictates these decisions and some things have to slide as a result. It happens payments sometimes go out late and sometimes you have no control over that. Usually, it won't affect you much until the day you get into an accident when you haven't gotten paid yet. It's always a terrifying time, will your insurance cover it? Is there a grace period? What do I do if my insurance drops me? These are valid questions and concerns and we will explore them in this article.
It feels arbitrary and unfair but a late payment could cause your insurer to drop your policy altogether and they may not take you back. If they do, you got lucky because if they don't get their money it will be difficult to get another policy. That's not to say that you can't get insured elsewhere but you can expect to pay a higher premium. Some states have laws that govern when an insurer can drop you but often there is nothing saying you can't be dropped in the middle of your policy. Most companies will allow you a slip but chronic tardiness could lead them to drop you all together and may charge you the remaining balance before they insure you again. Insurance is a gamble against risk and late payments indicate a gamble they may not want on their portfolio. It is vitally important to understand that there is nothing that will legally make them keep a client.
There is also a belief that people have some kind of grace period because that's how utilities work but insurance isn't considered a utility despite it being required to have by law. When it comes to insurance it is best to pay early. Even if they have accepted payment a few days late in the past doesn't mean they'll be patient forever. What's worse is if they do drop you from their rolls you may have a hard time getting insurance elsewhere. Insurance companies view late payments in the same light as non-payment. There is no distinction for them even if you mailed the payment by the due date. Premiums are almost always higher for consumers with poor credit and if this is an ongoing problem, they may lump you in with drivers with DUIs and multiple at-fault accidents. That is to say, you will be forced into non-standard auto insurance which is more expensive and covers less than standard insurance.
So, you're in an accident, and your insurance has lapsed. You are understandably angry because you simply had to wait another day or two. You can complain to the state insurance department and often they will help resolve your issue but it may not go in your favor. Most states do prescribe notice of the cancellation of your insurance after a set number of days but this may not always be the case and you may be at the whim of an insurance agency that doesn't have time for your tardiness. It can get pretty dark pretty fast when you're late on a payment.
There is a way back but it can take time and money and if you lie about why you were canceled when you apply to a new agency they will find out and they may cancel you again which will put you further in the hole. So, if the worse happens and your insurance company drops you for late payment or worse drops you the day you get into an accident you may have a distance to climb, but it is a doable prospect just do all the things you did in the first place. Comparison shop, do research on the agencies out there, and how the rate increases could affect you. Get your credit rating up as quickly as you can and stay accident and ticket free and also try not to let your insurance lapse for long because that factors into your premium as well.
Now armed with this knowledge go forth and make sure you pay your insurance bill before the electric or the cable, they're a little more forgiving.
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