A grace period for car insurance is a specified time frame after a car payment due date when the policyholder may be allowed to make a payment without experiencing a lapse in coverage.
The length and terms of a grace period typically depend on the insurance carrier, the specific policy, and state law. Not all insurance providers or states will give policyholders a grace period, though. Here, we'll break down what a grace period is and how it may affect your auto insurance coverage.
The purpose of a grace period
The purpose of a grace period is to help a policyholder maintain continuous coverage in the event of a delayed payment, such as during a brief period of financial difficulty. It can prevent an immediate policy cancellation if a payment is not made by the due date. If your policy is cancelled, you wouldn’t be able to drive legally in most states.
How a grace period works
Typically, an auto insurance grace period may begin the day after a premium payment is due. The carrier usually designates the duration of the grace period, which may range between 7 to 30 days. The details differ from one plan to the next and could also depend on the state. Note that not every carrier offers a grace period.
During a grace period, an insurance policy may remain active despite the premium payment being past due. If a policyholder allows their plan to go unpaid beyond the grace period, this can create a lapse in coverage that becomes a gap in their insurance history, which may affect their ability to obtain a new policy or maintain the same rate.
What happens after the grace period ends?
The insurance carrier may cancel the policy due to nonpayment after the grace period ends, at which time the policyholder could be left without coverage. This would make the policyholder entirely responsible for the damage and liability in the event of an accident. Driving without a policy may lead to potential fines or a suspended vehicle registration in states that require minimum auto insurance.
Learn more about policy options
Infinity Insurance Agency, Inc. (IIA) works with 20+ carriers that offer different car insurance policy options. To learn more about the grace period terms for different carriers, you can contact one of our knowledgeable, Spanish bilingual agents.
Call IIA at 1-855-478-3705 or get a free quote online today.