What to Do If Your Car Insurance Payment is Declined in 2024
If your automatic payment for car insurance doesn't go through, your car insurance may be canceled. Here's what to do if your car insurance payment was returned by the bank.
Free Car Insurance Comparison
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Heidi Mertlich
Licensed Insurance Agent
Heidi works with top-rated insurance carriers to bring her clients the highest quality protection at the most competitive prices. She founded NoPhysicalTermLife.com, specializing in life insurance that doesn’t require a medical exam. Heidi is a regular contributor to several insurance websites, including FinanceBuzz.com, Insurist.com, and Forbes. As a parent herself, she understands the need ...
Licensed Insurance Agent
UPDATED: Aug 22, 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.
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: Aug 22, 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.
On This Page
- Automatic withdrawals for auto insurance occasionally fail to go through for various reasons
- You need to act based on the method by which you send automatic payments
- Ultimately, you have the responsibility of sorting out the problem, though usually insurance companies and banks will work with you
Read more: How to Get an Electronic Automatic Billing Auto Insurance Discount
Choosing to have your auto insurance payments deducted automatically is convenient. However, occasionally system glitches or human errors result in your payment not going through. If you have a failed auto-draft payment, your insurance company might cancel your policy.
If this happens, you need to know what to do to reinstate your policy as quickly as possible, because driving without auto insurance is illegal in most states. There are several steps to take to identify the problem, and you need to initiate all of them. Handling this problem is your responsibility, though financial institutions and your insurance company will likely cooperate with you.
What should you do if your car insurance auto-draft payment doesn’t go through?
Make sure you understand how auto insurance payments work to avoid missing a payment. But in the case that you do miss a payment due to a failed automatic payment, there are simple ways to solve the problem. As is the case in many problems, start with the easiest potential solution. Check to see that your information is correct. An incorrect expiration date or another minor issue can affect automatic payments.
Car Insurance Company-Initiated Payments
If your insurance company withdraws your payments directly from your financial account without any action on your part, contact them to make sure they have the correct account, as well as the right name, routing number, and transfer number for your financial institution.
Make sure that whoever took the information about your account did not drop zeros at the beginning of the identifying numbers or make other inputting errors. If your insurance company is responsible for withdrawing your payment, they should not cancel your policy if the mistake is on their end.
Using the Bank’s Bill Pay Feature for Auto Insurance
If you use your financial institution’s automated bill pay feature, make sure you added your car insurance account correctly if your Progressive payment was returned by the bank, or with any other insurance company. This includes your insurance account number and the postal address for your insurance company.
These types of problems generally occur only on the first automatic withdrawal or bill pay transaction. The right details are vital for financial transactions to complete successfully.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
Confirm Your Account Has Sufficient Funds for Your Car Insurance Payment
If your account did not have enough money to pay the automatic draft from your insurance company, your bank or credit union may have refused to pay. If this was the problem, you need to do these things:
- Confirm with your insurance company the date they withdraw your payment from your account.
- Automatic payments are also called automated clearinghouse or ACH payments. Check with your financial institution about policies regarding ACH withdrawals.
- Direct deposits post at midnight, which is considered the next day for business purposes. Make sure you have adequate funds before the withdrawal occurs.
If you have had an emergency and know that you can’t afford your auto insurance, contact your insurance company and explain the situation. Tell them when you will be able to make the monthly payment. They may be willing to work with you to make a partial payment or give you a one-time delay to keep your policy from being canceled. It may be a good time to look at how much coverage you actually need to pay for.
Make Automatic Payments of Auto Insurance Easier
Keeping track of automatic payments is often more complicated than making them. Because of the convenience of digital payment transactions, multiple types of payments exist. Make sure you understand the exact process used for withdrawing your digital insurance payment:
- Set limits. Carefully manage the number of automatic monthly payments you set up. If you have too many automated withdrawals, keeping track of them becomes complicated.
- Know the method. Be sure you understand how your payments are set up. Is your car insurance company withdrawing them? Is your financial institution sending them on a fixed date? This knowledge helps you keep track of the process.
- Schedule wisely. Automated payments only can go through if you have enough money in your account. Contact your insurance company and schedule your monthly payment just after your payday. This step can remove much stress.
Automatic payments are intended to make it easy for you and for your insurance company. If you are having regular trouble making your payment, contact the company about rescheduling its due date to avoid cancellation.
What To Do if Your Bank Returns Your Auto Draft Car Insurance Payment
If you have ever experienced having a payment returned by the bank, you know the sinking feeling that comes with the notice. However, you can sort out this problem. Doing so takes patience and determination, but act quickly and you can manage it. Generally, your insurance company will work with you to re-establish your policy.
Prevention is better than problem-solving. Check your account at least twice weekly to monitor withdrawals and payments. Set up email notices if you have that option so you will know when various payments go out.
If you find a problem, report it immediately to your insurance company as well as to your financial institution. The nature of the payment determines which entity you contact first. Begin by talking to whoever initiates the payment. Keep records of who you speak to and what actions occur each time.
If you notice a payment was missed in your regular account inspections, handle it immediately. If you are able to make the payment, contact your insurance company to pay manually to ensure your policy will continue uninterrupted.
To prevent future pain from having your auto insurance payment returned by the bank, make a budget. Your auto insurance payment is the same each month, so you can easily factor that in with your monthly expenses to avoid unpleasant surprises. If you feel you can’t afford your auto insurance at the moment, there may be other solutions to help you balance your checkbook. Look into ways that you can make your insurance more affordable, such as adding auto insurance discounts.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
Final Thoughts On Canceled Policies After Failed Withdrawals
Automatic payments are convenient — except when they fail. If your automatic payment for your car insurance policy does not go through, you could face the cancellation of your policy. However, staying on top of your financial transactions can help you t prevent problems as well as to detect glitches early. The sooner you spot a missed payment, the easier you can solve the problem and reinstate your policy if it was canceled.
Frequently Asked Questions
Why did my insurance company cancel my policy after a failed auto-draft payment?
Insurance companies typically require policyholders to make regular premium payments to maintain coverage. If your auto-draft payment fails for any reason, such as insufficient funds or an expired credit card, your insurance company may cancel your policy due to non-payment.
What immediate steps should I take if my insurance company cancels my policy after a failed auto-draft payment?
If your insurance company cancels your policy, it’s important to take immediate action to ensure you have appropriate coverage. Here are the four steps you should consider:
- Contact your insurance company: Reach out to your insurance company as soon as possible to understand the reason for the cancellation and to discuss potential options for reinstating your policy or securing new coverage.
- Address payment issues: Resolve any payment-related issues promptly. If the failed payment was due to insufficient funds, make sure you have sufficient funds available and arrange for payment. If the payment method needs to be updated, provide the necessary information to your insurance company.
- Explore reinstatement options: In some cases, your insurance company may allow you to reinstate your policy if you rectify the payment issue promptly. Ask about the specific requirements and any associated fees or penalties for reinstating your coverage.
- Consider alternative insurance options: If reinstating your policy is not possible or feasible, start exploring alternative insurance options. Shop around for new insurance providers and compare quotes to find the best coverage and rates for your needs.
Can I reinstate my policy after it has been canceled due to a failed auto-draft payment?
The ability to reinstate your policy after it has been canceled due to a failed auto-draft payment depends on your insurance company’s policies and the specific circumstances. Some insurance companies may offer a reinstatement option if you resolve the payment issue promptly and meet any necessary conditions. However, it’s important to contact your insurance company directly to discuss reinstatement options and understand any associated fees or penalties.
Are there any fees or penalties for reinstating a policy after a failed auto-draft payment?
The fees and penalties for reinstating a policy after a failed auto-draft payment can vary depending on your insurance company’s policies. Some companies may charge a reinstatement fee in addition to requiring you to pay the missed premium amount. It’s crucial to contact your insurance company directly to inquire about any applicable fees or penalties associated with reinstatement.
What should I do if reinstating my policy is not possible or feasible?
If reinstating your policy is not an option or not feasible, you’ll need to secure alternative insurance coverage to ensure you’re protected. Here are the three steps you can take:
- Research alternative insurance providers: Start researching and comparing insurance providers to find new coverage. Consider factors such as coverage options, rates, customer reviews, and any specific requirements you may have.
- Obtain quotes: Reach out to multiple insurance companies to obtain quotes based on your specific needs and circumstances. This will help you compare prices and coverage options.
- Purchase new insurance: Once you have found a suitable insurance provider, go ahead and purchase a new policy. Make sure you understand the coverage details, payment terms, and any other relevant information before finalizing the purchase.
Note: It’s crucial to maintain continuous auto insurance coverage to comply with legal requirements and protect yourself from potential financial risks.
Free Auto Insurance Comparison
Enter your ZIP code below to view companies that have cheap auto insurance rates.
Secured with SHA-256 Encryption
Heidi Mertlich
Licensed Insurance Agent
Heidi works with top-rated insurance carriers to bring her clients the highest quality protection at the most competitive prices. She founded NoPhysicalTermLife.com, specializing in life insurance that doesn’t require a medical exam. Heidi is a regular contributor to several insurance websites, including FinanceBuzz.com, Insurist.com, and Forbes. As a parent herself, she understands the need ...
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.