Can I get auto insurance if I owe another company?
If you are asking, "Can I get auto insurance if I owe another company?" the answer is yes. If you want to switch car insurance companies, you can do so whenever you wish. However, you should pay off outstanding billswith your current company before switching to avoid insurance rate increases (nearly $500 a year) due to a poor credit score.
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Michelle Robbins
Licensed Insurance Agent
Michelle Robbins has been a licensed insurance agent for over 13 years. Her career began in the real estate industry, supporting local realtors with Title Insurance. After several years, Michelle shifted to real estate home warranty insurance, where she managed a territory of over 100 miles of real estate professionals. Later, Agent Robbins obtained more licensing and experience serving families a...
Licensed Insurance Agent
UPDATED: Sep 3, 2024
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Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Sep 3, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
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A common question is “Can I get car insurance if I owe another company?” The answer is yes, you can switch companies while still owing another company. If you are worried about owing money to an insurance company, it’s probably not as bad as you think.
Switching insurance providers is a smart move when you’re not getting the cheapest auto insurance rates. In fact, a car insurance switch might be just what you need to get back on track with your bills – just be sure to pay your previous company the money you owe as soon as you can.
Not paying off your outstanding balances could result in a poor credit score, which will negatively impact your car insurance rates.
If you’ve paid off your old insurance company and want to find a cheaper option, enter your ZIP code into our FREE online tool to get multiple quotes and start comparing cheap rates.
Switching Insurance Companies When Owing an Insurance Company Money
Nothing can stop you from switching car insurance companies if you still owe money to your current provider. If you find a better deal with another company, changing insurance companies is a smart move.
You will just need to terminate coverage with your current provider when you are ready to invest with the new company. In this case, it should be as simple as calling your current provider as soon as you have formalized arrangements with the new company.
Your previous insurance provider will then terminate your current policy, and you should have nothing to pay as most insurance is paid in advance.
Can you owe money to a car insurer?
But what happens if you owe an insurance company money? It’s unusual for anyone to owe money to their insurer. In most cases, you pay for insurance coverage in advance, so you shouldn’t worry about falling behind.
However, if you forget to make a payment, your insurance company will typically send you a reminder and give you a grace period to catch up.
Sometimes an insurance company will issue an endorsement causing a material change to the policy, which may trigger an outstanding balance. If you owe an insurance company money, be sure to make up those payments as soon as you can.
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How Auto Insurance Companies Structure Payments
You typically pay insurance payments in advance as the company takes the risk on your behalf when they confirm the policy. Underwriters assess individual policies based on how much risk they represent and then calculate a yearly rate. However, many providers are willing to let you make semi-annual or even monthly payments.
Insurance Company Grace Periods
Many companies will offer a grace period for car insurance debt to give you time to submit your payment if you have forgotten to do so. Some organizations will provide you with 10 to 14 days, while others may offer an entire month.
For example, the Geico new car grace period. Many insurance companies offer a new car grace period for customers who purchase a new vehicle.
The new vehicle grace period allows you to add the new car to your existing insurance policy or obtain a new policy without immediately providing all the details about the vehicle.Schimri Yoyo Licensed Agent & Financial Advisor
It’s important to contact your provider directly or refer to your policy documents to get accurate information about their new car grace period. They can provide details about how long the grace period lasts, what coverage is provided during this time, and any requirements or steps you need to take to ensure continuous coverage for your new vehicle.
After the grace period, if you fail to pay, your provider will likely send you a formal letter advising you that they will be terminating your coverage due to non-payment.
Learn more: What to Do if You Can’t Pay Your Auto Insurance
How Not Paying an Insurance Company Can Harm Your Credit Score
What happens if you owe car insurance money to a provider? It’s never a good idea to default on a premium, so if you are switching insurance companies, ensure that you always make the final payment to your first provider. If they cannot recover that money from you, it may show up as a default on your credit report.
Also, keep in mind that insurance companies check credit reports when writing a new policy, so this default may cost you more in the future through higher premiums.
Read more: How Credit Scores Affect Auto Insurance Rates
Take a look at the table below to see how your credit score can affect your rates.
Auto Insurance Monthly Rates by Credit Score
Insurance Company Good Credit Fair Credit Poor Credit
Allstate $110 $130 $150
American Family $105 $125 $145
Farmers $115 $135 $155
Geico $95 $115 $135
Liberty Mutual $100 $120 $140
MetLife $108 $128 $148
Nationwide $102 $122 $142
Progressive $98 $118 $138
State Farm $90 $110 $130
Travelers $112 $132 $152
USAA $85 $105 $125
As the data shows, you’ll get the best rates with a good credit score, while with a fair score, your rates can increase by up to an average of 31%. With a poor credit score, your rates may increase by as much as 127%.
Do auto insurance companies share information?
Remember that insurance companies check driver records when figuring rates. These companies share some of this key data, and if you apply for coverage with a new provider, they will be able to see your history. If they notice that you have a termination for non-payment, they may increase your premiums.
What to Do if You Can’t Pay for Auto Insurance
If you have difficulty paying for insurance, ask your provider about low mileage premiums or see if you qualify for any auto insurance discounts.
Read more: How to Lower Your Auto Insurance Rates
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Consider Getting Auto Insurance With No Down Payment
Another option, is you could get car insurance with no down payment. But, before you sign up for instant auto insurance with no down payment, it’s essential you fully understand the pros and cons. Learn more here in our guide: Cheap Auto Insurance With No Down Payment
Car insurance with no down payment, also known as zero-down payment car insurance, works differently depending on the insurance provider and the specific policy.
Here are 6 key points to understand about this type of insurance:
- Payment Structure: With traditional car insurance policies, you typically pay a down payment (a portion of the annual premium) upfront, followed by monthly payments toward the remaining premium amount. In contrast, no down payment car insurance allows you to start coverage without paying a down payment when you sign the contract.
- Monthly Payments: Instead of a down payment, you will pay higher monthly premiums to cover that missing upfront payment. This means that your monthly insurance payments will likely be higher than they would be with a traditional policy that includes a down payment.
- Eligibility Requirements: Insurance providers may have eligibility requirements for no down payment car insurance. For example, you may need to have a good driving record or meet certain criteria to qualify for this type of policy.
- Cancellation and Refunds: If you cancel a no down payment car insurance policy, the refund process can vary. Some providers may refund any unused premiums on a pro-rated basis, while others may have specific refund policies in place.
- Comparing Costs: When considering no-down-payment car insurance, it’s essential to compare the total cost of insurance, including monthly premiums and any additional fees. While not paying a down payment upfront may seem convenient, you may end up paying more over time due to higher monthly premiums.
- Policy Terms: Always review the terms and conditions of the insurance policy carefully before purchasing. Pay attention to coverage limits, deductibles, exclusions, and any other important details that could impact your coverage.
Keep in mind that availability and terms for no-down-payment car insurance will vary between providers and states. It’s very important that you shop around, compare car insurance quotes, and discuss your options with insurance agents to find the best coverage that meets your needs and budget. Use our quote generator to find cheap car insurance with no down payment today.
Bottom Line: Can you get car insurance if you owe another company?
So, can you get auto insurance if you owe another company? Yes, you can still apply for coverage with another provider, even if you owe some money to your current company. Can you switch car insurance if you owe money? Yes, you can switch car insurance at any time. Changing car insurance companies is a wise move if it means lower rates or better coverage.
Make it a priority to pay off any outstanding bills to your previous provider, otherwise you face a penalized credit score and higher insurance premiums.
Whether you owe another insurance company money or not, enter your ZIP code into our FREE quote tool below to find auto insurance quotes so you’re ready to start a new policy as soon as you’ve closed out your old one.
Frequently Asked Questions
Can I get new car insurance if I owe another company?
Yes, you can still get a new auto insurance policy even if you owe money to another insurance company. The fact that you have an outstanding debt does not typically prevent you from obtaining auto insurance coverage.
Will my outstanding debt affect my ability to get auto insurance?
In most cases, your outstanding debt will not directly affect your ability to obtain auto insurance. Auto insurance companies primarily consider factors such as your driving record, type of vehicle, location, and coverage needs when determining eligibility and premium rates.
Do I need to disclose my outstanding debt when applying for auto insurance?
Generally, auto insurance applications do not require you to disclose information about your outstanding debts. Insurers mainly focus on information directly related to your driving habits and history, vehicle details, and personal information needed for underwriting purposes.
Can an auto insurance company deny coverage based on my debt?
Auto insurance companies typically do not deny coverage solely based on your outstanding debt. As long as you meet their eligibility criteria and have a valid driver’s license, you should be able to obtain auto insurance coverage. However, keep in mind that your credit history can affect your premium rates in some cases.
Will my outstanding debt impact my auto insurance premium rates?
Generally, your outstanding debt itself does not directly impact your auto insurance premium rates. However, some insurance companies may consider credit-based insurance scores as part of their underwriting process. These scores take into account factors such as your credit history, which may indirectly influence your premium rates.
Should I inform my auto insurance company if I have an outstanding debt?
It is generally not necessary to inform your auto insurance company specifically about your outstanding debts unless specifically asked on the application form. However, it’s essential to provide accurate information about your driving record, vehicle, and personal details to ensure proper coverage and avoid potential issues during claims.
Does switching car insurance affect credit?
No, switching car insurance does not directly affect your credit. You can indeed switch car insurance to another company at any time, even if you have an open claim or owe money.
This means you can change car insurance providers or switch carriers whenever you find a better option that meets your needs.
If you feel you need to switch insurance companies, use our free quote search tool today to see if there are better rates in your area.
Can I cancel my insurance policy and get my money back?
Whether you can cancel your insurance policy and get a refund depends on several factors, including the type of insurance policy you have, the terms and conditions of the policy, and the insurance provider’s policies.
Here are some general guidelines:
- Type of Insurance Policy: Different types of insurance policies (e.g., life insurance, health insurance, auto insurance) may have different cancellation rules and refund policies.
- Policy Terms and Conditions: Review the terms and conditions of your insurance policy to understand the cancellation process, any fees or penalties for early cancellation, and whether you are eligible for a refund.
- Cancellation Period: Many insurance policies have a “free look” or cooling-off period during which you can cancel the policy and receive a full refund of premiums paid. This period is typically within a few days of purchasing the policy.
- Pro-rated Refunds: If you cancel your policy after the cooling-off period, you may still be eligible for a pro-rated refund of premiums for the unused portion of the policy term.
- Fees and Penalties: Some insurance providers may charge a cancellation fee or impose penalties for early cancellation. These fees can reduce the amount of money you receive back.
To get specific information about canceling your insurance policy and potential refunds, it’s best to contact your insurance provider directly. They can explain the process, any applicable fees, and the amount of refund you may be entitled to receive.
Can you go back to an insurance company that dropped you?
It depends on the insurance company, but you can apply for insurance at the company again and see if it will accept you.
What happens if you don’t pay your car insurance?
Believe it or not,”What happens if you stop paying insurance?” is one of the top questions we get asked.
If you don’t pay your car insurance premiums, several consequences can occur, depending on the specific situation and the insurance provider’s contract agreements.
Here are 5 potential outcomes you must be aware of:
- Lapse in Coverage: The most immediate consequence of not paying your car insurance premiums is a lapse in coverage. This means your insurance policy becomes inactive, and you lose the protection it provides. If you’re caught driving without insurance during this period, you could face legal penalties, such as fines or license suspension, depending on the laws in your state.
- Late Fees and Penalties: Insurance providers often impose late fees or penalties for missed or late payments. These fees can increase the total amount you owe and make it more challenging to reinstate your policy.
- Policy Cancellation: If you continue to miss payments without making arrangements with your insurance provider, they may cancel your policy. A canceled policy can have long-term consequences, as it may affect your ability to get insurance in the future and could result in higher premiums when you do get coverage again.
- Reinstatement Process: If your policy lapses or is canceled due to non-payment, you may have the option to reinstate it by paying the outstanding premiums, late fees, and any other charges. However, insurance providers may require you to meet specific conditions or undergo a review before reinstating your policy.
- Credit Score Impact: Non-payment of insurance premiums can also negatively impact your credit score. Insurance companies may report missed payments or canceled policies to credit bureaus, which can lower your credit score and make it harder to obtain credit or loans in the future.
To avoid these consequences, it’s crucial to stay current on your car insurance payments.
If you’re facing financial difficulties that prevent you from paying your premiums, contact your insurance provider as soon as possible.
They may offer options such as payment plans or temporary adjustments to help you maintain coverage and avoid a lapse in insurance.
Can my car get repossessed for no insurance?
Yes, your car can be repossessed for not having insurance. Depending on the laws in your area, you may face legal consequences if you drive a car without insurance.
In most states, having car insurance is a legal requirement, and driving without it can result in fines, license suspension, or other penalties, including your vehicle getting repossessed.
This is why it’s essential that you understand and comply with the insurance contract to avoid potential legal and financial consequences.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
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Michelle Robbins
Licensed Insurance Agent
Michelle Robbins has been a licensed insurance agent for over 13 years. Her career began in the real estate industry, supporting local realtors with Title Insurance. After several years, Michelle shifted to real estate home warranty insurance, where she managed a territory of over 100 miles of real estate professionals. Later, Agent Robbins obtained more licensing and experience serving families a...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.