Auto Insurance Grace Periods

Should you be given a grace period on your car insurance renewal? There is confusion because there are grace periods in health insurance, life insurance, etc. But California law does not address the subject of a "car insurance grace period." Also the answer may vary because some car insurance companies will give you a grace period to reinstate your policy. But this is not intended as free coverage.

If your carrier does offer a grace period, it's for back payment only, of up to 30 days back premium and reinstatement. The company will probably want to re-inspect the vehicle for damage. Auto insurers are not into buying claims. Should you get into an accident during that time, you do not have coverage. Your policy will have an exact time and date, i.e. 12:01am, on 02/01/2010 and should you get into an accident at 12:02am, there's no coverage.

If your coverage lapsed, but you could get 30 days of free coverage under a grace period, when you did have an accident, then the insurance company to pay for a preexisting condition. If this were possible, no one would get insurance until they actually had an accident, and all car insurers would go bankrupt.

California and most other states now require insurers to electronically transmit insurance verifications to the DMV and it directs the DMV to notify a vehicle owner if the vehicle is not insured. In the old days, People would get a policy number, just to take to the DMV to get tags and registration, than cancel the insurance right away. Nowadays the DMV will be notified when a policy is issued and cancelled.