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What Happens If You Don’t Pay Your Insurance Premium?

Unfortunately, not paying your car or home insurance premium can have more serious consequences than you might anticipate.


UPDATE May 7, 2020 - If you are having difficulty paying your insurance premiums during these unprecedented times, your insurer and/or state may have assistance in place. Please visit our customer service page for contact information for your carrier and visit our post about our carrier partners' responses to COVID-19 and what they are doing to help.

If money's tight, finding expenses to cut is a good way to make some room in your budget. But finding places to cut back can be difficult. Especially if you're not driving often, your insurance may seem like a logical expense to scale back on. But what happens if you miss or stop paying for your insurance premium? Unfortunately, not paying your car or home insurance premium can have more serious consequences than you might anticipate.

What can happen if you don't pay your insurance premium

1. You’ll get a reminder.

Most insurance companies for home, renters, auto, and “toys” will send you a reminder if you’re late or missing a payment. This will usually be a few days after a missed payment, so they give you the opportunity to pay your bill with a small late fee.

At this point, you want to try to pay your bill as quickly as possible. We’ll be getting into the consequences of avoiding this reminder below.

2. You won’t be covered for any damages.

Missing even one payment can result in a loss of coverage for your home or car. If you don’t pay, your insurance won’t cover you in the case of any type of claim.

Let’s say you miss the payment for your March home or renters’ insurance. Now, you’re not covered that month. A storm comes through and a tree branch falls into your window. Or a thief steals your TV. Or a deliveryman trips on your porch. You aren’t covered for any of this. You’re not covered for any damage to your home or liability of your house. You have to pay for all of that—the damage to your house, a new TV, or any liability costs (which can be exorbitant) and court expenses—all out of pocket.

The same is also true for your car. If you miss a payment, you won’t be covered for any accidents, scrapes, or incidents occurred on your car during that time.

This is doubly troublesome if you get a lapse of coverage in your car and you get into an accident or pulled over by a cop. Certain types of auto insurance are mandatory by law (depending on the state), and a lapse of coverage could land you with serious fines and penalties. Most states require bodily injury liability and property damage liability as a minimum. Some also require uninsured/underinsured motorist coverage. Make sure you’re familiar with the legal requirements in your state.

It might not seem like a huge risk to not have coverage for a month or two. But it’s often the way of life that when you’re not prepared for disaster, disaster strikes.

3. Your insurance premium cost could rise.

If you miss even one payment, your insurance company has the right to cancel your coverage altogether. A lapse in coverage could make any future policies much more expensive, especially for car insurance.

Most insurance companies don’t want to see that you’ve had a lapse in coverage, even for a day or two. Maintaining consistent insurance is the best way to keep your premium low.

And if you miss a payment, other insurance companies will be able to see this when you go to buy insurance again. This could mean you could get denied for insurance, or it could drastically raise your premium costs moving forward.

Even one missed month can raise your insurance costs for the forseeable future.

4. It could go to collections.

If the insurance company doesn’t receive your payment, they might send the bill to a collections agency. The collections agency will start bothering you nearly every day until your debt is paid.

But collections is not just a bother. A debt in collections can take a serious hit on your credit score. The greater the debt, the more points you can lose on your credit. And a low credit score can impact your ability to buy or rent a home, lease or buy a car, open and maintain credit cards, get a bank loan, and make investments. It will even influence the cost for your utilities and future insurance.

Learn more about the concerns of collections with Credit Karma.

5. You could lose your car or home.

If you are leasing a car or renting a home, the lender may require certain types of insurance. For example, a lot of HOAs require you hold a minimum amount of renters’ insurance, and a car financer might require collision and comprehensive coverage.

If you don’t maintain their required level of insurance, a lender has the right to evict you or take back the car. You could lose your home or car with one or two missed insurance payments.

What about my extras?

At this point, some people will start to take a tally of their insurance. You definitely don’t want to lapse on coverage for your home or car, but what about your “toys” that you aren’t using? What happens if you don’t pay your boat insurance in the winter months?

As with home or car, your toys also wouldn’t be covered for any damages if you miss a payment. If your boat is stored in your shed and your shed floods with water, any damage to your boat won’t be covered by insurance. Any and all expenses would be coming out of your pocket. Plus, like your home or auto, lapses in coverage could raise your insurance for these toys in the future.

So rather than default on a payment, consider working with your insurer to lower coverage for toys in the off-season. If you’re not using your boat, motorcycle, or RV, you may be able to drop coverage to only the bare minimum to keep you protected without a lapse.

How to save on your insurance

Rather than not paying your premium altogether, it’s worth looking into ways to lower your costs for the time being. You might consider reducing your coverage temporarily, and you can re-add coverage to your policy later when you’re in a different financial situation.

What can you do to minimize the cost of your insurance premium?


Missing an insurance premium payment can have serious long-term impacts. You could end up paying for serious damages out of pocket, you could be left without insurance, you could have increased insurance rates in the future, you could hurt your credit score, and you may even lose your home, car, or other assets altogether.

Don’t let a missed payment wreak havoc on your life. If your premium is too high, it’s time to talk to an InsuraMatch insurance advisor at (844) 300-3364 to find the right policy, company, and cost for your situation.

We’re excited to hear from you to keep you and your belongings safe and covered. Call us now to start comparing quotes - (844) 300-3364!

Categories: Auto, Home, Renters