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Written by:
Prachi Singh
Contributing Writer
Prachi is an insurance writer with a master’s degree in business administration. Through her writing, she hopes to help readers make smart and informed decisions about their finances. She loves to travel and write poetry.
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Reviewed by:
Laura Longero
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Executive Editor
Laura Longero is an insurance expert and Executive Editor at CarInsurance.com, where she specializes in helping consumers navigate the complexities of the financial and insurance industries. She has 15 years of experience educating people about finance and car insurance. Prior to joining CarInsurance.com, she worked as a reporter and editor at the USA Today Network. Her expertise provides readers with practical guidance, helping them make informed choices about their financial and insurance needs.
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If you are unable to pay for your car insurance by the due date, then your policy will normally cancel on that day, and your car will be uninsured. In general, there is no type of grace period for car insurance policies, so if you do not pay on time, the policy terminates, and you are without coverage. Most car insurance companies will give you up to a month to make a payment.

In many states, if you have a lapse in auto insurance coverage, you can face penalties such as fines, fees, registration, and license suspension, to name a few. To avoid the penalties if you are unable to pay for car insurance and thus keep the state-required minimum coverage on the vehicle, you will need to turn in your license plates and registration. Since most states require insurance on the vehicle for the car to be registered if you turn in the plates and registration, they can’t penalize you for not having insurance.

Of course, this means you will have to find someplace to park your vehicle (most states do not allow an unregistered and uninsured vehicle to be parked on a public roadway) and find other means of transportation until you can afford to put insurance back on your vehicle. Your insurance may be higher once you can get it started again due to the lapse in coverage and previous cancellation due to non-payment on your record.

If you cannot afford your current car insurance premium, then shop around to see if you can get lower rates that will fit into your budget. If you need to keep Collision and Comprehensive coverages on your vehicle (a lien holder will normally require this if you still are paying on a loan or lease for your vehicle), you may be able lower your rates by choosing higher deductible amounts. Look for ways to save money on car insurance premiums instead of dropping insurance and continuing to drive and being penalized by the state for driving without insurance.

If you cancel insurance on a car that has a lien holder on it, then likely the bank or other financing institution will place forced insurance on your vehicle and add it to your car’s monthly payment. Forced Placed insurance is expensive and only covers the lien holder’s asset, the car, and does not provide you with liability insurance or other insurance requirements that your state has in place. So if you have a lien holder on the car, it will be cheaper in the long run if you can figure out a way to keep your own auto insurance on the vehicle at a much lower cost than what forced placed insurance will cost if the lien holder does it.

To get instant car insurance quotes and find a way to keep the insurance you can afford on your vehicle, click here.

Michelle Megna contributed to this story.

Laura Longero

Ask the Insurance Expert

Laura Longero

Executive Editor

Laura Longero is an insurance expert and Executive Editor at CarInsurance.com, where she specializes in helping consumers navigate the complexities of the financial and insurance industries. She has 15 years of experience educating people about finance and car insurance. Prior to joining CarInsurance.com, she worked as a reporter and editor at the USA Today Network. Her expertise provides readers with practical guidance, helping them make informed choices about their financial and insurance needs.

John McCormick

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John McCormick

Editorial Director

John is the editorial director for CarInsurance.com, Insurance.com and Insure.com. Before joining QuinStreet, John was a deputy editor at The Wall Street Journal and had been an editor and reporter at a number of other media outlets where he covered insurance, personal finance, and technology.

Leslie Kasperowicz

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Leslie Kasperowicz

Executive Editor

Leslie Kasperowicz is an insurance educator and content creation professional with nearly two decades of experience first directly in the insurance industry at Farmers Insurance and then as a writer, researcher, and educator for insurance shoppers writing for sites like ExpertInsuranceReviews.com and InsuranceHotline.com and managing content, now at CarInsurance.com.

Nupur Gambhir

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Nupur Gambhir

Managing Editor

Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service.

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Contributing Writer

Prachi is an insurance writer with a master’s degree in business administration. Through her writing, she hopes to help readers make smart and informed decisions about their finances. She loves to travel and write poetry.