What happens if I miss a car insurance payment?
Worried you can’t pay your car insurance or already missed a car insurance payment? Here we look at the consequences and the steps you can take to help prevent future payment problems.
Key takeaways
A missed car insurance payment could result in a late or missed payment fee, your policy being cancelled and may negatively affect your credit score
Ensure enough money is in your account, possibly scheduling payments after payday
Make sure you inform your insurer immediately if you can't make a payment
You might miss a car insurance payment for various reasons. Perhaps you don’t have enough money in the bank account you’ve used for your direct debit, or you might simply have forgotten to make the payment.
Whatever the reason you’ve missed a payment, it’s important to rectify it as soon as possible.
What happens if I miss a car insurance payment?
If your car insurance payment hasn’t gone through or you’ve missed it, here’s what can happen:
Penalty fees
Missing a payment can cost you - you might have to pay late or missed payment fees. If your missed payment was because there wasn’t enough money in the account you use for the direct debit, your bank may also charge you.
Cancelled insurance
Your insurance provider might cancel your car insurance. It is illegal to drive without insurance, so you won’t be able to use your car until you have a new policy.
You’ll have to declare a cancelled policy when looking for car insurance, and this will make it harder and more expensive to get insured.
Lower credit score
If you have a credit agreement with your insurer then a missed or late payment could negatively affect your credit score, and can stay on your credit file for up to six years. This could lower your credit score and make it harder to be accepted for a mortgage, loan or credit card.
What happens if I can't pay my car insurance this month?
If you know you won’t be able to afford your car insurance payment, then contact your insurance provider immediately.
It might feel daunting telling your provider you are experiencing financial difficulties, but they might be more understanding than you expect. Depending on your provider, you could be given the following options:
Make an online payment
Your insurer might allow you to make a separate online payment. If you’re going to do this, you should tell your bank so you don’t end up paying twice.
Pay in instalments
Your provider could give you the option to pay in instalments to make your car insurance payments more manageable for you.
Amend your insurance policy
Your insurer might remove parts of your policy to make it more affordable for you. For example, your provider could cut out add-ons such as car keys cover.
What is the grace period for insurance payments?
You car insurer may allow a certain period of time following a missed monthly payment before they cancel your insurance or report the missed payment to the credit reference agencies. This is known as a grace period.
How long your insurer waits before attempting to take the payment again can vary so you should check your insurance policy documents or your insurer’s website or contact them directly to avoid cancellation.
During the grace period you should receive reminders to pay. If you haven’t spoken to your provider and the payment doesn’t go through when they retry or you don’t make a separate payment within the time frame they’re likely to then cancel your insurance.
How long do I have to make a missed car insurance payment before my policy is cancelled?
Car insurance providers have different grace periods (if they offer one at all). It could vary from a few days before they attempt repayment to a few weeks.
It’s best to speak to them and find out what their process is and if the time frame can be extended, if necessary.
How do I check if my car insurance is paid?
You can find out if your car insurance payment has gone through by:
Checking with your bank or credit card provider, depending how you usually pay for car insurance
Logging onto your car insurer’s website
Contacting your insurance provider directly
Why hasn’t my car insurance payment left my bank account?
There may be a simple explanation as to why your car insurance payment hasn't left your bank account, including:
Incorrect information
If it’s your first direct debit payment, make sure you’ve given the right bank account details to your provider.
System failures
Your bank might be experiencing technology issues which can cause a delay in payments. Contact your bank to find out if they’re having any problems.
Spending limits
Some bank accounts have daily spending limits and your car insurance payment might exceed the cap you’ve been set.
Insufficient funds
If you’ve set up a direct debit, you might not have enough money in your chosen account to cover the car insurance payment.
Make sure you have enough funds in the account to ensure the payment goes through. You could also be strategic about the payment date for your car insurance - schedule it for payday or just after, to make sure there will be money in your account.
Will my car insurance premium increase after a missed payment?
If you miss one monthly car insurance payment it might not impact your car insurance premiums.
However, if your insurer reports it to the credit referencing agencies it will show on your credit report and that could have an impact when you next take out insurance, if you choose to pay monthly.
Frequently missing payments or having your car insurance cancelled could make it harder to get cover and lead to more expensive premiums.
How can I avoid missing car insurance payments?
If you can afford to, paying for your car insurance annually rather than in monthly instalments reduces the risk of a missed payment
Keep your details up to date, especially if your circumstance change such as moving house or switching banks
Set an alert on your phone or write reminders on your calendar ahead of the payment date
Build up a no-claims discount, which can help with affordability
Set aside some money to cover for unexpected circumstances can help avoid missed payments
If you’re experiencing financial difficulties, consider seeking debt advice from charities such as Citizens Advice or StepChange
How can I find cheaper car insurance?
Comparing car insurance quotes with MoneySuperMarket is a quick and easy way to find affordable cover. Just tell us about yourself, your driving history, and the car you want to insure, and we’ll search the market for quotes that match your requirements.
You’ll be able to compare car insurance policies by the overall cost of cover, the type of policy, and the excess you’d need to pay to make a claim. Once you’ve found the deal you want, just click through to the provider to finalise your purchase.
Author
Sarah Tooze
Car & Van Insurance Expert
Sarah Tooze has been a motoring journalist for more than 15 years, specialising in company cars and vans, and has won a number of awards during her career, including the Newspress ‘Automotive...
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Collette Shackleton
Content Writer
Collette Shackleton is a highly skilled Content Writer who has over nine years’ experience creating helpful and engaging personal finance content for consumers. Collette shares her experience as a...
