|Question: Help! I forgot to pay my auto insurance premium last month. Will my insurance company cancel my policy?|
Maybe, maybe not. Instead of immediately canceling your policy, your company might just send you an overdue notice and charge you a late fee. The company might inform you that your coverage will remain in force as long as your insurance agent receives payment before a certain cancellation date. Even if you miss that date, you may still be able to reinstate your coverage if you pay the past due amount (again, plus any extra charges that might apply).
Other insurance companies may not be so lenient with overdue premiums. In fact, some companies might simply cancel your coverage--even if you're only a day late with your premium! If you subsequently pay the overdue amount and all charges, your company may still refuse to reinstate your coverage. If that happens, don't assume it will be easy to buy a policy from a different company. After your company cancels your policy, you may have a hard time finding similar coverage elsewhere. Even if you can, it may be at a higher price than you were paying before.
Your state has laws that spell out when an insurance company can and can't cancel someone's coverage. However, most states allow insurance companies to cancel coverage when premiums aren't paid on time. Typically, to exercise this right, all your insurance company has to do is give you 10 days' notice and inform you exactly when your coverage will be terminated. You should also read over Part F of your personal auto policy to see if there are any restrictions on your insurer's ability to cancel the policy. If you're unsure about anything, give your insurance agent a call. He or she can explain your rights (and your insurer's rights) under the policy as well as state law.