Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Written by

Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 21, 2020

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Key takeaways...

  • If you miss an insurance payment, your coverage could be terminated
  • Effective auto insurance policies need to be in writing
  • If you are caught driving uninsured, your license may be revoked

Auto insurance companies with a lot of variation because there are so many different car types to cover as well as drivers.

The fluctuation between single drivers versus married, family drivers versus seniors, is so great, different policies exist for each demographic.

However, certain characteristics or conditions are common in all car insurance coverage policies, regardless of the insurance provider involved.

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Table of Contents

Customer Premiums Need to be Paid

Auto insurance only works when the insurance provider is paid up for the cost of coverage. If insurance bills are missed, then technically the car insurance coverage lapses.

This lets the insurance provider off the hook because nonpayment is considered a termination of the coverage contract per the client.

Being late with a payment can trigger this kind of response, and some insurance providers look for these kinds of delays to get out of coverage in an accident soon after.

However, if the provider accepts the payment, even late, then the contract continues. This is what happens when your coverage lapses.

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Coverage Needs to be in Writing

Effective auto insurance policies need to be in writing. Verbal coverage policies are not legal and are unenforceable. Anyone stating they can provide insurance coverage for a fee verbally is probably pulling a scam.

Consumers should be provided a signed policy agreement copy and a policy copy when starting a policy.

Additionally, these policies may change over time, with updates provided periodically. It’s up to the client to make sure he’s aware of the changes and what they mean once received.

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Caps Limit Coverage

If an insurance policy includes a monetary cap, either per accident or total cost per year, then that is the financial limit the insurance provider is responsible for.

Any claims beyond that amount fall back to the client to have to pay.

This can be a bit of a problem with clients who only opt for the minimum required insurance.

Many car accidents with physical injuries can cost far more that state-required limits used in minimum insurance policies.

Insurance Doesn’t Mean Payout

Just because a driver has insurance coverage doesn’t mean that it automatically provides a payout during an accident or property damage to a covered car.

Most times, insurance companies at least cover the repair of the vehicle involved.

However, each claim is reviewed to make sure the insurance provider is not getting hit with a false claim.

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Penalties Apply For Missing Coverage

Most states have civil as well as criminal penalties that apply if a driver is caught without insurance.

While many people can get away driving for months without insurance coverage being proven, all it takes is one accident to occur.

Even if a person is the safest driver, he can’t control the actions of others.

Once the accident occurs, missing proof of insurance can trigger an investigation.

A driver caught without coverage usually will incur a monetary penalty for a first offense, a loss of his driver’s license and a fine for a second offense, and jail time for a third offense.

Internet Comparison Shopping

While the above points will appear as elements in almost every auto insurance policy that exists, there is still plenty of variation between insurance companies to make window-shopping worthwhile.

To obtain the most comprehensive information, consumers can take advantage of auto insurance comparison websites.

For the consumer, all he has to do is enter basic information about the insurance policy desired, type of car to be covered, age, location, and zip code.

The search engines do the rest of the work, providing easy to read comparisons of multiple car insurance quotes based on the consumer criteria originally provided.

The difference between companies can range from as much as $50 to $300 per policy. This benefit can save a consumer significant dollars when shopping for a policy.

Buyer Beware

Even with Internet research, consumers should always look for insurance providers who are established and historically operate a nationwide network.

Even though Internet websites can find the cheapest policy possible, it’s not always the best choice to go with.

Consumers should always research the specific insurance provider as well before signing any kind of coverage agreement and making a payment.

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References:

  1. https://www.geico.com/information/faq/cancel-insurance/
  2. https://www.thebalance.com/policy-canceled-for-non-payment-2645553
  3. https://www.geico.com/
  4. https://www.statefarm.com/