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When your premium payment is late

Late premium payments can, and might, result in policy cancellation ¨C even if you are only one day late! The truth is, unlike homeowners policies which generally allow for a ¡°30 day grace period¡± to make premium payments, most insurers can cancel auto policies immediately for lack of payment if allowed by state law. Check the law in your state to see what grace periods are allowed. The National Association of Insurance Commissioner¡¯s (NAIC) website ( provides links to state insurance departments. Look under consumer information to see whether your state provides a grace period.

But will they? The good news is that most insurers won¡¯t cancel your policy for non-payment if it is a one-time occurrence because they want your business. However, if you are chronically late, your insurer may take advantage of your non-payment and cancel your policy ¨C especially if you¡¯ve become a bad risk. It is also important to realize that many insurers may require you to pay your entire term balance before reinstating your coverage if you¡¯ve passed the cancellation date on your policy.

Avoid bad credit scores! Being cancelled for non-payment of premiums may also earn you a bad credit score and cost you more on future policies with other insurers. Most insurers use credit scores (your overall credit history) to assess their risk. The lower your credit score, the more you will pay for insurance. If you don¡¯t have the money to pay your premium, contact your insurer immediately and see if you can work out a payment schedule. A bad credit score will follow you from insurer to insurer and could leave you without insurance altogether!

Take advantage of new resources. Many insurers, such as Geico and State Farm, now allow for online payments that can be automatically deducted from your checking and savings accounts. If you are a chronic late payer, take advantage of these new resources to avoid bad credit scores.


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