What to Do if You Can’t Pay Your Auto Insurance (2024)

What happens if you don’t pay car insurance premiums? If you can’t pay for your car insurance, problems can arise at even the best companies for affordable insurance. Consequences range from canceled insurance coverage and increased rates to illegally going without insurance.

If you can’t pay for your next car payment or have already missed a payment, you can take a few different steps to get back on track. The easiest is to make a payment soon within the auto insurance grace period if you can afford it.

There are ways to make up for missed payments and reduce costs so you don’t face insurance cancellations. Read on to learn more about what you can do to remedy the problem and what happens if you don’t pay your car insurance rates. 

What to Do When You Can’t Pay Your Car Insurance Payment 

If you cannot pay your car insurance payment, immediately call your insurance company and tell a representative, “I can’t afford car insurance.” 

Your insurer may be able to work with you to arrange a payment plan and reduce your costs for future payments. 

However, if you are past the payment plan grace period and your insurance is already canceled, your options are more limited and the consequences will be more serious. 

We’ve outlined the different situations and your options below. 

When Your Payment Isn’t Due Yet 

What if I can’t pay my car insurance this month? If you don’t have enough money to pay your next insurance payment, immediately speak to your auto insurance company. It may be able to extend the due date to give you additional time to pay or allow you to make a partial payment for the month and pay the remaining balance later. 

While partial payments and extended due dates depend upon the insurance company, most companies will offer some leeway, especially if you have a history of making payments on time. 

When You’ve Missed The Payment

If you have missed the payment, your options depend upon whether you are still within your company’s grace period or not. If you are within the grace period, your insurance company will not cancel your insurance policy. 

Most insurance companies have a grace period of around 10 days, although it may be longer or shorter, depending upon the company. 

Speak to the insurance company before the payment date rather than after the fact. If you are only late by a few days, you are likely within the grace period and won’t face cancellation. 

However, the insurance company may charge you a late fee for missing the payment due date. Even if it agrees to accept a partial payment or extend the date, you will likely still have to pay an additional late fee. 

Learn More: Best Auto Insurance Companies That Don’t Charge Late Fees

When Your Car Insurance is Canceled 

Auto insurance cancellation is the worst-case scenario. If this happens, your insurance company may not take you back, even if you can get another policy. 

You should try your hardest to avoid this situation by working out payment plans and delayed payments before the point of cancellation. 

Once your insurance is canceled, your rates will increase due to the lapse in coverage. You will have to work to decrease your insurance rates and possibly sign up with a high-risk insurance company. 

What happens when you don’t pay your car insurance payment? 

You face cancellation and legal penalties if you cannot pay your car insurance payments and fail to work with the insurance company ahead of time to bring down costs and delay payments. 

You could lose your license for being uninsured, face fines, and more. We’ve outlined what happens if you don’t pay and your insurance company cancels your insurance below. 

Canceled Car Insurance 

Suppose you don’t pay before the end of the grace period. In that case, the insurance company is within its rights to terminate your auto insurance policy and refuse to reinstate you as a customer. 

Canceled auto insurance will likely lead to higher insurance rates, whether you sign up with your same insurance company or a new one. 

If you lease a car and your coverage is canceled, your lender may use force-placed insurance. This is when your auto lender will buy an insurance policy on the vehicle to protect their assets. 

Force-placed insurance will drive up your car payments, as your lender will add the cost to your bills. It can be expensive and time-consuming to remove force-placed insurance, so it is in your best interest to avoid this scenario. 

Legal Penalties 

Along with canceled auto insurance come several legal penalties. Not carrying insurance is illegal, so any lapses in coverage, even for a few days, can result in worse than an increase in car insurance rates if you’re caught driving without insurance. 

While the legal repercussions vary by state, drivers caught without insurance will face fines of up to $5,000. Some other consequences include: 

• Jail time 
• License plate suspension 
• Car registration suspension 
• Driver’s license suspension 
• Driver’s license points 
• Impounded vehicle 
• Reinstatement fees 

Generally, the more severe repercussions will only occur if a driver is a repeat offender. A first offense will likely result in only a fine. 

How to Decrease Your Car Insurance Payments 

If you are struggling with payments and want to avoid being unable to pay for car insurance in the future, the best way to accomplish this is to reduce your auto insurance costs today.

There are several ways to achieve lower rates when you can’t afford car insurance, from applying for discounts to increasing your deductible. 

Drop Unnecessary Coverages

Carrying a bare minimum insurance policy of only the state-required liability insurance can significantly reduce your insurance rates. If you have add-on coverages like roadside assistance or modified car insurance, consider dropping these coverages to lower your monthly rates. 

Take a look at the table below to get an idea of what a minimum liability policy will cost you with some of the top insurers.

Liability Auto Insurance Rates by Provider

Insurance Company	Monthly Rates
	$61
	$44
	$37
	$53
	$30
	$67
	$44
	$39
	$33
	$38
	$22
U.S. Average	$45

You might want to consider carrying liability-only insurance if your car is old and no longer worth much. With a bare-bones policy, however, you will only be covered when you have to pay for other drivers’ accident costs, but your own accident costs won’t be covered. 

Compared to full coverage, minimum coverage may be wiser if you need to save money. Below are the average rates for full coverage by state so you can be better informed.

While dropping your extra coverages will make your policy more affordable, you will not be able to drop coverages if you have a lease or loan on your car. Lenders require drivers to carry collision and comprehensive insurance, also known as full coverage.

Improve Credit Score

Most states permit insurance companies to use credit scores when calculating insurance rates. As a result, drivers with poor credit scores may pay hundreds of dollars more than drivers with good credit scores. 

Look at the table below to see how much improving your credit score can reduce your insurance rates. 

Full Coverage Auto Insurance Monthly Rates by Provider & Credit Score

Insurance Company	Good Credit	Fair Credit	Bad Credit
	$135	$165	$245
	$166	$197	$296
	$116	$136	$203
	$95	$115	$175
	$140	$161	$269
	$82	$100	$148
	$177	$226	$355
	$120	$133	$166
	$109	$138	$206
	$91	$118	$200
	$120	$155	$230
	$107	$128	$194
U.S. Average	$123	$148	$226

A poor credit score can add hundreds of dollars to your insurance rates. While you can’t immediately improve your credit score, slowly improving your credit over time will help reduce your auto insurance costs. 

Increase Insurance Deductible

Increasing your insurance deductible will significantly reduce your insurance costs. Your insurance deductible is the amount you agree to pay after an accident before your insurance coverage kicks in. 

So, if you have a $500 deductible and have $1,000 worth of damages after an accident, your insurance company will pay you $500. Therefore, the higher your deductible, the lower your rates will be. Just make sure you can still afford the deductible to fix your car.

Increasing your deductible too high could leave you without a car as you struggle to find the money for repairs. 

Qualify For Discounts 

Make sure you qualify for as many discounts as possible, as car insurance discounts can significantly reduce your rates. Safe driving discounts often reduce rates the most, but even small discounts like paperless billing can help save money on auto insurance.

Common Auto Insurance Discounts

Ask your insurer for a list of discounts or check the company’s website to take advantage of all the discounts available to you.  

Switch Insurance Companies

Frequently shopping around at different insurance companies will ensure you always get the best rate. Switching your insurance company could save you hundreds of dollars on your annual car insurance rates.

If you cannot make auto insurance payments, get quotes from a few different insurance companies near you to find cheaper rates. 

Switch to Usage-Based Insurance

Switching to a usage-based insurance company could drastically reduce your auto insurance payments if you don’t often drive. Usage-based insurance, also known as pay-per-mile insurance, charges a monthly base fee and then an additional per-mile fee for each mile driven. 

If you don’t use your car often, usage-based insurance can make insurance much more affordable. The monthly base fee is often just a few dollars a day, and the per-mile cost is only a few cents per mile. 

However, keep in mind that some usage-based insurance companies track driving habits in addition to mileage, so being a good driver can help you save even more money.

The Final Word on Being Unable to Afford Car Insurance Payments 

Talk to your insurance company the instant you realize that you cannot make a car insurance payment or have already missed a payment. Your insurance company may be able to work with you by offering an extended deadline or accepting partial payment. 

However, once your insurance is canceled, you may face increased insurance rates and legal repercussions if caught driving without insurance. 

If you need to find a new insurance company with cheaper rates, your best option is to shop around. Use our free quote comparison tool to see if there are more affordable companies in your area.