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In the insurance industry, you are allowed to get insurance through a different insurance company even if you owe another one money. However, in most cases, you are likely not going to owe your old insurance company any money. When an insurance company cancels your policy, it is highly unlikely that they are going to expect payment from you. The only real way you are going to owe them money is if you make a backdated change to your policy. This rarely happens, since most changes to insurance policies are made immediately. The other main reason why you likely aren’t going to owe your insurer money is due to the billing cycle of insurance companies. Insurance companies make you pay for your insurance bill at the start of the month for the coverage of that month. Missing a bill doesn’t impact them very much for that exact reason.

Does A Lapse In Insurance Affect Insurance Rates?


A lapse in your insurance can have a huge impact on your car insurance rates. Insurance companies want to see that the vehicle owner maintains their insurance. It takes time for an insurance company to set up an insurance policy.  They do not want to do this on a regular basis for you. Any lapses that you have in your insurance policy are definitely going to be a concern for an insurance company. Be expected to be asked why you had a lapse in coverage. Expect to also have to pay a higher insurance premium as a result of that lapse in coverage. Remember, if you are currently in a period where you have a lapse in coverage, you are not legally allowed to drive a vehicle. If you get caught, you can be fined, have your license suspended, and even face jail time.

Can Insurance Companies Check Your Previous Insurance Payments?

An insurance company cannot directly check your insurance payments. A credit report is where you will find you are impacted for missing insurance payments. Therefore, when you go to finance or lease a vehicle, you might have a tough time doing so. For some people, this will make no difference to them as they buy their own vehicles with cash. For others, this can be worse than having to pay a higher insurance premium as a result of missing insurance payments. You might not even be able to get a vehicle at all, depending on your situation, which is extremely unfortunate. Missing an insurance payment is not something that you are going to want to do whenever possible.

Will You Be Charged For A Late Payment Grace Period?

late payment

A grace period given to you by an insurance company is unlikely to cost you extra money. Once you make the late payment back to your insurance company, you are likely not going to be charged a fee if there is a grace period in place. Some insurance companies work differently than others, but this is generally the case. Repeated late payments on your insurance are not recommended even though there is a grace period in place. Once an insurance company starts to see a pattern of missed payments, they will start to wonder if they can trust you and when you will start to miss payments altogether. Try your best to make your payments on time each and every time and you won’t run into issues.

What Happens When Your Insurance Policy Is Canceled For Non-payment?

When your insurance company is canceled for non-payment, you should attempt to find a new insurance provider right away. The longer you wait after having your insurance policy canceled, the more an insurance company will question your lapse of insurance coverage. When an insurance company cancels your insurance for nonpayment, they do not have to give you notice of cancellation. This is unfortunate because as soon as this happens, you will be unable to drive. In the best-case scenario, you can call back up your insurance company and pay them what you owe them to get your insurance coverage back. This is going to look much better to other insurance providers. When they look at you in the future it will look like there was a disagreement or miscommunication rather than a non-payment situation because you couldn’t afford the payments.

How Do I Make Sure That I Don’t Miss an Insurance Payment?

One of the best ways to make sure you don’t miss insurance payments is to make sure that you have the money in your account. Generally, insurance comes out on the same day each and every month. Get into a habit of checking your account balance before that date to make sure that you have enough money in there. Another great way of making sure you don’t miss insurance payments is by paying for your insurance upfront. This is extremely expensive, but some people like to pay for their insurance this way. Generally, if you can pay for your insurance upfront, you will be able to get a pretty good discount on your insurance.

If I Want To Go Back To The Same Insurance Company Do I Have To Pay What I Owe?

go back

You can likely get away with transferring insurance companies and not paying your old insurer. You will not be able to go back to your old insurer, though, without paying what you owe them. Expect to have a number of fees due from your old insurance company. You should also expect to have to pay your regular monthly insurance premium. They may even want extra compensation from you depending on the situation. A lot of the time, your insurance company will not take you back at all. In fact, if you have had a lapse in your insurance policy, you might have a hard time getting insurance from a different insurance company as well.

To Conclude:

In the insurance industry, your reputation is everything. Although insurance companies might not be able to see that you missed a car payment, they will definitely see a lapse in insurance coverage. When they see this, it definitely raises some red flags. Insurance companies are all about maintaining risk. The more risk that you carry, the higher the insurance premium that you’re going to have to pay. An insurance company might not know why you had a lapse in insurance. They can probably guess that it had something to do with non-payment or you doing something illegal, though. Therefore, this never looks good to have on your record. It is something you should attempt to avoid at all costs by making sure you pay your insurance bill each and every time.

About the Author: Ashley Miller

Ashley is an insurance content professional and very knowledgeable on all related subjects. Ashley has over 12 years of insurance content writing experience working with various insurance companies throughout her career.