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What is a Car Insurance Grace Period?


Many car insurance carriers offer a grace period. They are not all created equal and can vary a lot per insurance carrier. Grace periods can certainly come in handy, but it is important not to overuse them. Becoming dependent on your grace period can get you in a tight spot in the future. Learn what a grace period is and use it wisely.

What exactly is a grace period?

A grace period is the amount of time you have to make your insurance payment after your normal due date. Paying within an allotted grace period will allow your insurance policy to continue without a lapse in insurance coverage.

How long is a grace period normally?

Unfortunately, there really is not a normal amount of time offered in a grace period by all insurance carriers. It really varies by carrier and state. Some grace periods can be three days while others can be up to 30 days. Some companies offer a few day grace period with no late fee, then an extended grace period which does include a late fee.

Do all insurance carriers offer a grace period?

Not all insurance carriers offer grace periods. You will have better luck when you are insured with a preferred insurance carrier verse a high risk insurance carrier. High risk carriers usually have shorter grace periods and higher late fees. A grace period is an extra perk not a requirement. Do not automatically assume you have a grace period with your car insurance policy.

Can I use a grace period every month?

Some insurance carriers do allow clients to use their grace period every single month. However, it is never a good idea to do so. Paying within your grace period every month can have some very negative consequences to your policy in the future.

  • Late fees are often added to your payment when you pay in your grace period. Late fees can vary from two all the way up to twenty dollars. Adding that kind of fee onto your car insurance premium can make a huge difference in your annual insurance cost.

  • Paying in your grace period can actually delay any of your change requests. Many insurance carriers will not process your change request until your monthly payment has been made. Holding off on your payment can increase errors on your car insurance because a change cannot be made immediately.

  • When you are late on your payment it can disrupt your future payment plan. Only so many days are in a month and the insurance company is required to send you a bill with so many days notice. Paying within your grace period every month can throw the system off leaving you with a double payment in a future month to catch you up.

  • Preferred insurance carriers may be less likely to reinstate your car insurance policy if you pay in your grace period every month. If your policy does ever lapse, you want to show you were a good client who always paid in a timely manner. Paying in your grace period over and over could reduce your chance of being reinstated.

Tip: Beware of insurance carriers who allow payment in a grace period except for renewal payments and sometimes the last payment in a billing cycle. Abnormalities like this make an accidental lapse in coverage more likely. Know your insurance carrier's grace period rules and make sure to follow them.

What happens if I go past my grace period?

At the end of a grace period your car insurance coverage is stopped. Go past your grace period date to make your payment and you no longer have car insurance. If an accident occurs even one day after your grace period, you are on your own without any coverage from your prior policy.

To get coverage back on your vehicles, often there are more penalties which usually means a higher rate or a stricter payment plan option. It is possible to get your policy reinstated just by mailing your payment into the main office, however you will probably have better luck working directly with your insurance agent. It is up to the insurance carrier whether or not to accept you as a driver risk at this point.

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