A car insurance grace period allows you to keep your coverage for a short time after a missed payment. But you should make up the missed payment right away to avoid cancellation.
Athena Valentine Lent is a finance columnist for Slate and the author of Budgeting for Dummies (Wiley, 2023). Her writing has appeared in BuzzzFeed, The College Investor, GOBankingRates, Money Under 30, and Keeper Tax among other places. Her personal finance blog, Money Smart Latina, won the Plutus Award for "Best Personal Finance Content for Underserved Communities" in 2020 and was nominated for "Blog of the Year" in 2022. When not working she can be found with her main man, a polydactyl cat named Harrison George.
As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.
Konstantin has led data teams across multiple industries, including insurance, travel, and biology. He’s led Insurify’s engineering team for more than three years.
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When money is tight, the last thing you want to do is lose your car insurance. Fortunately, many insurers offer grace periods, allowing you to maintain coverage for a period of time so that you can make up for a missed payment. A car insurance grace period can also refer to an insurer’s allowing temporary coverage in good faith for a newly purchased vehicle.
What is a grace period in car insurance?
If you’re late in making a payment, your car insurance company may extend you a grace period. A car insurance grace period is the time that an insurer allows you to still have coverage after missing a payment, usually seven to 30 days.[1]
Suppose you can’t make a payment or accidentally forget to pay. In that case, you can take advantage of your insurer’s grace period until you can make arrangements. But make sure to make a payment or contact your insurer before the grace period ends. If you wait too long, your insurer will likely cancel your coverage, leaving you uninsured.
You may also have a car insurance grace period when purchasing a new vehicle. To drive your vehicle off the lot, you need car insurance. A new car insurance grace period provides temporary coverage to your new vehicle when your insurance company can’t provide timely customer service to change your policy. The coverage you have for your old vehicle temporarily applies to your new vehicle.
Grace period after a missed payment: When you’re late or skip a payment, a car insurance grace period is the time in which your insurance company allows you to pay before canceling the policy.
Grace period for a new vehicle: You need insurance to drive your vehicle off the lot. A new car grace period is temporary coverage for up to 30 days until your vehicle is correctly added to your policy. This coverage can be through your current insurance policy in good faith. The dealership can also provide it if your insurance company can’t.
The car insurance grace period allows you to drive your vehicle with adequate coverage until you can make a payment arrangement. Continued non-payment after your grace period ends can result in the termination of your car insurance policy.
How long does a grace period last?
Car insurance grace periods vary by insurance company. Here are some examples of common grace periods:
Remember to read the fine print. Some policies may allow up to 30 days, but others allow fewer or even none.
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What happens if your car insurance lapses?
Your insurance company may be legally required to inform your DMV if your insurance lapses. Driving a car without insurance coverage is illegal, and the consequences vary from state to state.
A lapse in coverage can result in registration or driver’s license suspension. Suspension of your license and registration may require additional insurance coverage, such as an SR-22 certificate, to reinstate your driving privileges.[2]
A lapse in an auto insurance policy can also negatively affect your finances if you’re in a car accident. Without car insurance, you’re responsible for any property damage you cause. You can also be on the hook for other costs associated with the accident, such as medical expenses.
How to lower your car insurance payments
You can take steps to get a more affordable insurance payment, including:
Ask for discounts. Most insurance companies offer discounts on insurance products for the military, first responders, students, loyal customers, and people with a clean driving record.
Bundle insurance policies. If you need more than auto insurance, consider bundling your policies. You can bundle homeowners, renters, and life insurance policies with auto for a lower rate.
Increase your deductible. A deductible is an amount you owe for an insurance claim before coverage kicks in. Consider increasing the amount of your deductible to lower your monthly premium payment.[3]
Get rid of excess coverage. Another way to reduce your monthly payment is to eliminate any extra insurance you no longer need, such as comprehensive coverage or gap coverage.
Compare quotes. Contact other competitors to see what rates they’re offering. You could find not only an overall lower rate but also new customer discounts, among other savings.
Grace periods can benefit you if you know how to utilize them. Below, you’ll find answers to some of the most commonly asked questions about car insurance grace periods.
Can you drive a new car off the lot without insurance?
No. You can’t drive a new car off the lot without insurance. It’s illegal to drive a car if you’re uninsured. You may purchase a vehicle without prior insurance authorization, but you must have proof of insurance to leave the lot.
What happens if you have an accident during a car insurance grace period?
You still have the same coverage during your grace period. Unless your insurance has lapsed, you’ll be covered if you’re in a car accident. For further assistance, call your insurance company for details.
Can you extend a car insurance grace period?
It depends. You’ll need to talk with your insurer and explain your situation to see if it will offer an extension for a car insurance grace period. You may qualify for a financial hardship program for a few months.
Is it bad to pay your car insurance late?
Yes. You’ll still have insurance if you pay your car insurance bill before the cancellation date, but routinely making late payments can raise your car insurance premium and result in penalties or a late fee. Making late payments in some circumstances can also reflect on your credit report, lowering your score and further increasing your car insurance premiums.
Is it better to cancel car insurance or let it lapse?
Neither is ideal, as canceling your car insurance without securing a new policy is still considered a lapse in coverage. Canceling your car insurance may also not be an option, depending on state laws or vehicle financing. Your insurance premiums may also be higher when you sign back up. In both cases, consider reducing your coverage instead of terminating a policy.
Athena Valentine Lent is a finance columnist for Slate and the author of Budgeting for Dummies (Wiley, 2023). Her writing has appeared in BuzzzFeed, The College Investor, GOBankingRates, Money Under 30, and Keeper Tax among other places. Her personal finance blog, Money Smart Latina, won the Plutus Award for "Best Personal Finance Content for Underserved Communities" in 2020 and was nominated for "Blog of the Year" in 2022. When not working she can be found with her main man, a polydactyl cat named Harrison George.
As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.
Konstantin has led data teams across multiple industries, including insurance, travel, and biology. He’s led Insurify’s engineering team for more than three years.
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