With so many people paying for auto insurance, it is not possible for everyone to make payments on time. An auto insurance grace period helps individuals cope with late premium payments without losing credibility.
Most insurance policies issue policyholders a notice period before canceling their policies. This grace ‘notice’ period is usually an extension of 10-20 days from the regular monthly deadline to help anyone struggling to make payments.
Grace periods are usually dependent on insurance companies and car types. The flexibility your insurance company can offer must clearly be present in the initial contract to avoid any miscommunication. Your insurance company should also provide you with detailed guidelines on penalties outside the grace period.
This post looks at different types of auto insurance, what happens when the grace period is missed, and the consequences individuals face when doing so.
Types of Auto Insurance Claims
There are four main categories of auto insurance claims:
1. Bodily injury liability insurance
This insurance claim pays for the other party’s medical expenses in case physical harm is caused by an accident. A good auto insurance agent will advise you to get bodily injury insurance while signing up for regular auto insurance.
2. Property damage liability insurance
If you accidentally crash into someone’s property, this insurance category will help you recompense for their damages.
3. Comprehensive insurance
A comprehensive insurance policy protects your vehicle from unforeseeable disasters and situations such as floods and other natural catastrophes. Some states don’t require you to have comprehensive coverage, but a good car insurance firm will encourage you to sign up for it.
4. Collision insurance
Full coverage car insurance coupled with comprehensive coverage make up collision insurance. This includes damage caused by hitting another car, smashing into a stationary structure such as a pole, or colliding with a formation such as a building.
Now that we know the different types of insurance claims, let’s look at what options you have when you miss a premium payment to your insurance provider.
Missing An Insurance Payment
While most insurance companies offer a grace period, some might not. Missing a premium deadline would mean no coverage for your vehicle. Similarly, missing a grace period payment will create a lapse in your insurance coverage as well.
Constant late and missing payments will put you at a high insurance risk and may even mean higher premiums in the future. If you opt out of coverage altogether, you may have to deal with:
- Hefty fines
- Jail time
- Vehicle identification and registration suspension
- Legal ramifications
- Automobile impounding
- Driving license suspension
- Community service
- SR-22 filing requirements
How The Grace Period Works
A grace period is covered by your insurance provider. For instance, if your grace period extends to thirty days from your regular payment date monthly, you will have coverage for an additional month even though you have not paid for it.
There is no such thing as a standard grace period set by the law for insurance companies. Flexibility in payment options may be decided by companies depending on their financial and organizational feasibility. often set grace period durations based on their ability to absorb bad debts.
If you are experiencing trouble with your premium payment, it is best to call your insurance company beforehand to help you out. Unless you have a poor credit history, most top car insurance companies may be able to help you out. Some penalties for consistent late fee payments include:
- Higher premium amounts
- Extra payments out of your pocket
- High-risk insurance rates
Most insurance companies provide a grace period to help their customers from defaulting or falling into trouble. A good auto insurance agent will help you figure out a way around a late payment. If you anticipate a late payment, it is best to get in touch with your insurance provider beforehand.
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