Understanding Grace Periods When Buying Auto Insurance Online
When people buy auto insurance online, they tend to pay differently than they would if they bought car insurance in person or over the phone. Often, individuals who purchase online get the benefit of cheap car insurance; however, they must also pay online. This can lead to confusion and sometimes missed payments when it comes to using online payment methods. Luckily, most insurance companies that offer car insurance online also offer grace periods, or periods after a payment due date in which insurance holders can pay without penalty.
All auto insurance companies require their customers to pay for coverage at a certain time each month. If they do not pay, they are recognized as delinquent which means an additional fee. It also may mean their insurance is dropped, so an individual who gets in a car accident and who is not current on his or her insurance payment will not be covered.
When individuals purchase auto insurance online, such a strict payment schedule becomes problematic. To pay online, most people offer bank card or checking account information and the premium is deducted each month. However, people routinely change bank card or checking account information in order to prevent identity theft or because they have decided to change banks or account types. Similarly, occasionally accidents with auto debit accounts occur, and the payment is not withdrawn or is rejected because equipment is down or other technical errors occur.
A grace period protects auto insurance holders from losing coverage because of these errors. Many insurance companies that provide cheap car insurance increase their benefits by offering a generous grace period.
A grace period works like this: If a payment is due on the first of the month, a grace period offers a few extra days or even weeks in which customers can pay without a penalty. For example, if a person's car insurance premium payment is due on the first and the grace period is five days, then any payment received on or before the sixth will not result in a late payment fee. Individuals will keep their coverage during this time.
Individuals who purchase and pay for their car insurance online should not use the grace period as extra time to pay unless this is necessary because of pay day issues. However, individuals should check to make sure their payments go through each month — even if they are on autopay. They can then use the grace period to fix the problem if there is an issue with the electronic auto payment.
Grace periods are beneficial to individuals who must pay for their insurance online. However, people should be careful how they use grace periods.