Auto Insurance Collections and Reinstatement
Q: I was late paying my car insurance and the insurance company dropped my policy then sent me to collections. Do I still have to pay the bill? Can I be re-insured with them even after the lapse?
AIS Answer: Those are good questions, let’s start with the first one. Yes, when you have an outstanding debt, even if it goes to collections you are required to pay the bill. If the debt is rightfully owned by you and you refuse to pay it the collections company can get a court order for payment.
Next question. Getting your policy re-instated after non-payment is definitely possible with the same company, but it completely depends on the company’s rules. Companies with higher barriers to entry like State Farm (likes low risk drivers) may not consider you low risk after you’ve failed to pay your previous insurance bill and now carry no insurance. Now, a company like Progressive which underwrites all types of drivers may be more lenient. Though only the individual insurance company can definitively say if they will or will not cover you based on many factors.
Either way, if you own a vehicle and are not carrying auto insurance you’re considered high risk, and any kind of reinstatement is going to be more expensive whether you stay with the previous insurance company or choose a new one.
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I’ve been in the situation and it truly sucks. Reinstatement is tough because while the insurance company may take you back, you’ve got to pay higher rates because you let your insurance lapse. Kind of lose-lose.
You need car insurance, so work on paying that bill so you don’t find yourself in that position again. After 6 months you can jump to another insurance company.
Auto insurance companies seem to be the last people that go after your money via collections. I’ve had this happen to me simply because I had switched to another insurance company and still had a $30 balance. Months later I get this notice that they are attempting to collect a debt….ok…paid.