If you are a new driver, you must not be aware of the importance of car insurance. The first thing one should do when he/she starts driving is to get suitable insurance for their vehicle.
Many states consider it illegal to drive in public without having automobile insurance. The DMV can sue you for driving without insurance. Furthermore, if you get into an accident without coverage, the cost you will have to pay will be a hefty one.
That’s why insurance companies are there to save the day. However, if you stop paying for insurance, the insurance company won’t provide you with any coverage if you meet an accident, and they will cancel your policy. In this article, we will discuss what happens when you stop making your insurance payments.
Halting Car Insurance Payments
Car insurance payment feels like a huge burden when you have a tight budget. Paying a hefty amount every month can sometimes become impossible, leading to skipping payments.
When you skip a payment, the insurance company doesn’t cancel your policy abruptly. Instead, they contact you to inform you about one more opportunity to clear the charges. It is illegal for the company to not notify you first before canceling. However, if you don’t check your mails or missed calls, you will be the person to blame for not knowing about the cancellation of your policy.
When you skip a payment, the insurance company will reach out to you and inform you about the period for making the payment. If you don’t clear the amount within the said period, your policy will be gone for good.
The company’s period to clear the dues usually lasts 10-30 days, depending on your contract. Therefore, having complete knowledge of your agreement is necessary before purchasing.
Failing to clear the dues under the specified time limit will lead to the cancellation of your car insurance policy. After canceling the policy, the insurance company will notify the DMV about your situation, which will lead to the discontinuance of your driving license and cancellation of your registration. Above all, the authorities can confiscate your vehicle if you get caught driving without insurance, registration, and driver’s license.
Guidelines for Car Insurance
Skipping payment and getting your policy canceled doesn’t mean that you cannot get back your insurance. Insurance companies offer an opportunity to restore your policy and suggest backdating it.
Backdating is a pretty complex topic in car insurance. Opting for backdating can be risky if you don’t have a complete overview of it. Many states consider backdating illegal depending on the situation it is used in. However, if you are merely filling an insurance gap, then backdating is legal.
Furthermore, it is vital to pay attention to detail when switching insurance providers if you want to stay out of trouble. Sometimes, people cancel their previous insurance before hunting for a new insurance provider. Doing this is too risky as it is not easy to find a suitable insurance provider in such a short time.
The time you spent driving without insurance can get you into a lot of trouble if the DMV finds out about it. Therefore, finding a new insurance provider before canceling the older one is better if you want to stay safe.
Steps to Steer Clear of Skipping Car Insurance Payments
Taking precautions to stay out of trouble when you don’t have car insurance is crucial. Here are a few tips you should implement to steer clear of car insurance lapse:
- Divide your budget and open another account for your bills to keep track of your payments and avoid spending carelessly.
- Always have a good amount of money as a backup if you run out of money when paying for insurance.
The most efficient way of avoiding insurance lapse is by saving money and paying the yearly amount upfront. Doing so will solve all your problems, and it will allow you to save money more conveniently.
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