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Last updated: August 22, 2025
What Happens if I Don’t Pay My Car Insurance?
Failing to pay your car insurance will lead to a lapse in your coverage, which can have serious consequences.
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Car insurance rates are increasing across the country due to inflation, rising labor costs, and other factors. Depending on where you live, your insurance premium may make a big dent in your budget, but it’s a necessary expense.
Not only is driving without insurance against the law in all but one state, but it also provides important financial and liability protection if you get into an accident or your vehicle is damaged. You may miss a payment due to a lack of funds or simply because you forgot, but either way, it’s important to be aware of the potential consequences.
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Auto Insurance Payment Grace Period
Most car insurance companies offer a grace period if you miss a payment. This can range from seven to 30 days, so be sure to check with your insurer about their policy. Some states mandate that insurers provide grace periods in certain circumstances, but insurers may offer them even in states without requirements.
The grace period allows you to make a late payment without risking having your insurance cancelled outright. Your coverage will still be active during this period, and you should expect to receive notices from your insurer that your payment is past due. If you make the payment by the end of the grace period, your coverage will continue uninterrupted and you won’t need to worry about it.
Consequences of Not Paying Your Insurance
If you miss a payment and don’t settle up by the end of your insurer’s grace period — if it offers one — you may face the following consequences.
Lapse in coverage
Once the grace period is up, if your payment remains outstanding, your insurer will officially cancel your policy. If you don’t have another policy already in place, this means you’ll have a lapse in coverage. You will be uninsured until you purchase a new policy.
Driving uninsured
Driving without insurance is illegal in every state except New Hampshire, though the Granite State still requires you to prove financial responsibility if you don’t get insurance. While you may never get caught, you’re making a huge gamble every time you get behind the wheel without an active insurance policy. If you’re caught driving without insurance, you may face penalties including a fine, license and/or registration suspension, vehicle impoundment, or even jail time if you’re a repeat offender.
In addition to these penalties, you’re also taking on a huge liability if you drive uninsured. If you cause an accident, you will be solely responsible for the other party’s medical expenses and repair costs without any insurance to help you out. Depending on your state, the other party may sue you for damages, which will all come out of your own pocket.
Premium increase
A lapse in insurance coverage categorizes you as a higher-risk driver, which means that insurers will charge you more. Even a lapse of one day can cause your rates to increase when you go to reinstate your policy. It’s still possible to find affordable insurance after a lapse, but you should expect rates to increase on average.
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If you’re having trouble finding insurance after a lapse in coverage, check out our top provider picks for drivers with a coverage lapse.
Vehicle repossession
In extreme cases, you may have your vehicle repossessed by your lender if you lease or finance it. Lenders generally require full coverage insurance to ensure that damage to the vehicle is covered. If you stop paying for insurance and your provider cancels your policy, your lender is usually within its rights to repossess the car. Check the fine print in your loan/lease contracts to verify how your lender would handle this situation.
What To Do if You Miss an Insurance Payment
If you realize that you’ve missed your last insurance payment or receive a notice from your insurance company about it, contact your insurer immediately. If your payment is only a few days past due, you likely have nothing to worry about. Call your insurance company and confirm whether you are still in the grace period.
If you are, make your payment right away if you’re able to. You should be able to pay over the phone, or simply make the payment online as soon as you hang up with the agent.
If you’re already past the grace period and your insurance has lapsed, ask your insurer about reinstating your policy. This may be possible if your policy hasn’t been canceled for long. You may have to pay a fee, but it’s worth it to make sure you’re covered as soon as possible and avoid a longer lapse.
Your insurer may refuse to reinstate your policy, in which case you should quickly shop around and purchase a new policy as soon as possible. Again, you may end up paying more, but the priority is ensuring that you don’t drive without insurance.
How To Prevent Missed Payments
Making regular, on-time auto insurance payments will ensure that your policy doesn’t get cancelled due to non-payment and that you won’t have to face the outcomes listed above. One of the best ways to make sure you don’t miss a payment is to set up autopay, so you can have your account debited without having to think about it. Many insurance companies also offer discounts for setting up autopay.
For drivers who prefer not to use automatic payments, adding the due dates to a reminder app or calendar can be helpful. Your insurer may also send you an email reminder or app notification when a payment is due.
If you’re having trouble making payments because they’re straining your budget, look into ways to lower your premium or check if your insurer offers different payment plans. For example, instead of paying one large lump sum payment every year or every six months, you may be able to pay every quarter or even more frequently to keep the individual payments lower.
There are also many ways you can lower your premium, including dropping certain coverages, lowering your liability limits, looking for additional discounts, and improving your credit score. Be sure to also shop around at regular intervals to ensure you’re still getting the best rate.
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It’s better to have minimum liability-only coverage than no coverage at all. The average cost of minimum coverage in the U.S. is $53 monthly. If your auto lender requires you to carry collision and comprehensive — two of the most expensive coverages — look into raising your deductible in order to lower your rates.
Recap
Failing to pay your car insurance premium can lead to your insurance policy being cancelled, which will leave you uninsured. If you still plan to drive your vehicle, you’ll be driving uninsured, which is not only illegal but also leaves you at risk of significant financial and legal liability.
If you notice you’ve missed a payment, contact your insurer right away to sort it out. If you’re within the grace period, that’s as simple as making the payment. If you’re past the grace period, you’ll need to ask if your policy can still be reinstated or get a policy from another company as soon as possible.
If your insurance premiums are too high for you to afford, shop around for cheaper auto insurance companies to try to lower your bill.
Frequently Asked Questions
What happens if I don't have money to pay my car insurance?
If you don’t have the money to pay your car insurance and stop making payments, your insurer will cancel your policy. The reason for the non-payment is irrelevant to the insurance company. However, if you can’t afford your policy, look for ways to lower your premium, such as shopping around with different companies and looking for discounts.
What to do if you can't afford your car payment anymore?
If you can’t afford your car payments anymore, contact your lender to try to work something out. They may let you miss a payment or offer another solution, especially if the financial issue is short-term. If you don’t expect your situation to improve soon, you should consider selling or trading in your vehicle, as long as you have positive equity, to be able to pay off your loan and find a better option that fits your current budget.
Can unpaid insurance go to collections?
Yes, unpaid insurance can go to collections. Insurance companies don’t report your regular payments to credit bureaus, but outstanding balances can be sent to collections, which can ding your credit.
How much does it cost to reinstate your insurance?
The cost to reinstate your insurance will depend on your insurance company. Assuming they allow your policy to be reinstated, you’ll generally have to pay your previously unpaid balance at the very least. They may also charge a penalty and/or reinstatement fee on top of that.
Managing Editor & Industry Analyst
Maya Afilalo holds over 10 years of professional experience in writing, communications, and research, which she leverages to provide accurate and reliable information to empower consumers. In addition to overseeing content production, Maya has herself written many articles on auto insurance costs, company comparisons, state laws and requirements, and other topics. She is committed to helping consumers navigate the complex world of car insurance with clarity and confidence. Maya holds a bachelor’s degree from the University of Pennsylvania and a master’s from North Carolina State University.
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