If You Stop Insurance It May Affect Future Rates

car insurance protectionAs the motorists look for reliable insurer the same can be said for the other way around too. Two main premises of an policy contract is that the policyholder will pay the premium in a timely manner and the company will compensate the policyholder in case of an insured loss. You can see two big problems can upset both sides.

Carriers will be upset if the policyholder fails to pay due premiums. And probably the policyholder will be even more upset if the insurer doesn’t pay the claims. Companies take this disappointment a level further and penalize motorists who cannot keep a steady policy coverage. One of the first questions they ask on quote forms is if you are insured or not currently. If not, they want to know why not.

Lapses in the policies usually affect future premiums. A longer lapses may result in the applicant being treated as never had a policy before. So, you start getting rates as if you are buying your first policy with no history. If yo remember those days you will know how expensive it was.

For this reason it may be a good idea to keep a minimum coverage instead of letting it drop. This is very easy to arrange. If risks are low your insurer will let you have a low premium. If you just your car and you are going to buy a new one shortly this may be a good option to go. Also, saves you the hassle of arranging another policy. As soon as you buy your new car you can call the company and put it in cover.

You should make sure that you don’t have a policy cancellation because of missed payments. You should set up automatic payments and put it in your calender. Some companies may give you a call or send you a text to tell you that you missed the payment. They may also give you few days to send in the payment. There is a high chance you will get charged about $20 late payment fee. But, they don’t have to keep the coverage unless they pledged to do so or is required by your state to offer a grace period.

Remember missed bill payments will affect your credit score as well. So, you should pay attention not to get hit in several ways. If you have an accident at the time that your coverage was lapsed you will be in real trouble and no one wants that to happen. You may have to beg your insurer to pay the claim. If you can help it you should have solid coverage history.

You should also make sure that you leave no gaps when you are switching insurers. This can easily be done by setting the start date of your new policy same as the finish date of your old policy. If you are not good at keeping up with these things you may set up an automatic payment plan to renew your coverage once it expires.