Missed car insurance payment – what are the consequences?

Q: How can I avoid missing car insurance payments?

To avoid missing car insurance payments in the future: Create a budget to ensure you have enough funds set aside to pay your car insurance. Set up calendar alerts to remind you when your payment is due. If you pay by direct debit, set a day that guarantees you’ll have sufficient funds in your bank account to cover your payments. Shop around and compare car insurance quotes to see if you can find a cheaper deal with the right level of cover for your budget. Cut the cost of your car insurance. Removing optional extras, reducing your annual mileage and building a no claims discount could help you get a cheaper premium.

It’s easy to miss a payment deadline. Maybe you forgot to set a reminder or there weren’t enough funds in your account to cover the payment.

It could even be a computer glitch where the payment fails to process through no fault of your own.

So what happens if you miss a car insurance payment?

It’s easy to miss a payment deadline. Maybe you forgot to set a reminder or there weren’t enough funds in your account to cover the payment.

It could even be a computer glitch where the payment fails to process through no fault of your own.

So what happens if you miss a car insurance payment?

Written by

Julie Daniels

Motor insurance expert

Last Updated

26 JUNE 2024

4 min read

What happens if I miss a car insurance payment?

If you miss a car insurance payment or a payment fails to go through and you ignore it, the consequences could be serious:

Penalty fees: you could be charged late or failed payment fees by your insurance provider, as well as missed payment fees from your bank if your direct debit bounces.
Cancelled insurance: your insurance provider can cancel your car insurance. This means that you’re not insured to drive your car. It can also make it harder and more expensive to get car insurance in the future.
Lower credit score: missed or late payments can stay on your credit report for up to six years. This could bring down your credit score, which can make it difficult to get a loan, credit card or mortgage.

If you’re paying for your car insurance monthly by direct debit and there isn’t enough money in your account to cover a payment, it will bounce. This is sometimes called a returned direct debit.

The bank will make two attempts to make the payment on the day it’s due – the first in the morning and the second at 2pm. This is known as the retry process. It gives you some time to pay the money into your account, if that’s possible.

If the second attempt doesn’t work, your bank may charge you an unpaid item fee for the missed payment.

Your provider might give you further chances to make your payment before cancelling your policy, but this isn’t guaranteed.

Don’t drive if your policy is cancelled. Driving without insurance is illegal and the penalties are serious.

Did my car insurance payment go through or not?

Although paying for car insurance online is convenient, technology can sometimes let us down.

If you’ve made your annual payment online but haven’t received a confirmation, how do you know if it’s gone through? These are our tips:

Check the payment has left your account. You can do this by looking at your online banking or requesting a mini statement at an ATM.
Contact your insurance provider. They’ll be able to check your account to see if a payment has been received. If the payment failed, you could fix it straight away.

Why hasn’t my car insurance payment come out of my bank account?

There could be a few reasons why your car insurance payment hasn’t gone through:

Bank account details are wrong. If this is a first direct debit payment, check that you’ve given the correct bank account details.
System failure. Banks sometimes have technical glitches, which could delay payment processing. Check to see if there are any wider issues with your bank.
Over your daily limit. For your protection, some bank accounts allow you to set a daily spending limit. Check the payment hasn’t exceeded this limit.
Insufficient funds. You might not have enough money in your bank account to cover the car insurance payment. Contact your insurance provider, explain what’s happened and ask for another way to pay.

Top tip

When setting up a direct debit, choose a day that guarantees you’ll have sufficient funds to cover your monthly car insurance payments. For example, the day after payday.

What should I do if I can’t afford the next direct debit payment for my car insurance?

If you know you’re going to miss (or you’ve missed) a direct debit payment, you should contact your insurance provider right away.

Depending on what your provider allows, you might be able to:

Make a separate payment online. But let your bank know if you do to avoid paying twice.
Get an extension on your payment date to when you can afford the payment.
Spread the cost by paying in instalments.

The golden rule is to speak to your insurance provider directly and as soon as possible to see what your options are.

What happens if I can’t afford my car insurance?

If you can’t afford your car insurance, don’t leave it until you miss a payment. Contact your insurance provider and explain your financial situation. They may be able to provide help, such as agreeing to move your payment dates, partial payments, a payment holiday or waiving additional fees.

If you’re having money problems, MoneyHelper can help you find free debt advice.

And see our tips on how to get out of debt.

Where can I find cheap car insurance?

We’re here to help you find affordable car insurance. But remember, the cheapest car insurance isn’t always the best car insurance for you. Make sure you find a policy that suits your needs as well as your budget.

Frequently asked questions

How can I avoid missing car insurance payments?

To avoid missing car insurance payments in the future:

Create a budget to ensure you have enough funds set aside to pay your car insurance.
Set up calendar alerts to remind you when your payment is due.
If you pay by direct debit, set a day that guarantees you’ll have sufficient funds in your bank account to cover your payments.
Shop around and compare car insurance quotes to see if you can find a cheaper deal with the right level of cover for your budget.
Cut the cost of your car insurance. Removing optional extras, reducing your annual mileage and building a no claims discount could help you get a cheaper premium.

What is a grace period?

A grace period means that if you miss a payment, your insurance provider will give you a time frame to pay the outstanding balance. In the meantime, your cover should remain valid. They’ll attempt to collect the payment again or give you the option of paying the outstanding balance via your online account.

However, there’s no guarantee you’ll get a grace period on missed payments. Some providers may only give you this leeway on your first missed payment. Any further defaults will likely result in your car insurance policy being cancelled.

Check your policy, or your provider’s website, to find out exactly what will happen if you miss a payment, and if there’s a grace period.

What happens if I forget to renew my car insurance?

If you forget to renew your car insurance, your policy will lapse and you’ll no longer be insured. That’s why many insurance providers offer an auto-renew option to safeguard this from happening.

Automatically renewing your car insurance with the same provider is an easy option, especially if you tend to be forgetful. But it might not be the cheapest option – you could be missing out on potential savings.