Forgetting to pay your insurance premium can lead to a lot of inconveniences and potential financial risks. Insurance is a crucial part of protecting your assets and financial future.

Therefore, it is essential to understand what will happen if you miss a payment.

1. Policy cancellation and loss of coverage

When you miss a payment for your insurance premium, the insurance company will send you a notice informing you that your payment is overdue.

If you fail to pay the premium within the grace period, which typically lasts 30 days, your policy will be canceled, and you will lose your insurance coverage.

Once your policy is canceled, you will not be able to file any future claims, and all benefits provided by the policy will be forfeited. The only way to regain coverage is to apply for a new policy and undergo the underwriting process again.

This can be costly and time-consuming, and there is no guarantee that you will be approved for coverage.

2. High insurance rates

Insurance premiums are based on the risks associated with insuring a policyholder. When a policy is canceled due to non-payment of premium, it indicates to the insurance company that the policyholder poses a higher risk than others.

As a result, the policyholder may be considered a high-risk customer, and insurance rates will be higher for future policies.

3. Damage to credit score

When you miss a payment, the insurance company reports the non-payment to the credit bureaus. This can negatively impact your credit score, which can lead to difficulty obtaining loans, mortgages, and other forms of credit in the future.

A lower credit score can also result in higher insurance premiums for other policies.

4. Legal consequences

Driving without car insurance, for example, can result in fines and legal trouble. Being caught driving without valid insurance can result in a loss of your driver’s license and hefty fines.

Legal action can also be taken against you by third parties if you cause an accident while uninsured. In some states, it is even considered a criminal offense to drive without insurance, which could lead to jail time or community service.

5. Lapsed coverage

Coverage lapses are another consequence of failing to pay your insurance premium. A lapse in coverage is a period when you do not have insurance. During this time, you are not protected against any damages or injuries that may occur.

If something significant happens during this time, you could face significant financial losses and struggles. For instance, if you are in a car accident, you will be personally responsible for paying for your own damages and medical bills.

6. Difficulty obtaining coverage in the future

If you have a history of missed premium payments, insurance companies may view you as a high-risk customer and may be reluctant to offer you coverage in the future.

Even if you are able to obtain coverage, it will likely be at a higher premium rate than what you would have paid with a good payment history.

7. Increased stress and financial strain

Missing insurance premiums can lead to a lot of unwanted stress and financial strain. Insurance is in place to protect you from unexpected events, and not having coverage can put you at risk and lead to significant financial losses.

Conclusion

When it comes to insurance premiums, payment history is vital. If you miss a payment, the consequences can be severe. The best way to avoid this situation is to ensure you pay your insurance premiums on time consistently.

If you find yourself in a situation where you can’t pay your premium, reach out to your insurance company and try to work out a payment plan that suits your budget.