Every car insurance policy is going to cost money. Luckily, by working with an independent insurance agency, you can choose the best and most affordable plan from a variety of options. But affording the policy is just half of the deal. Paying for it is the other.

Auto insurance policyholders will have to pay a regular premium to their insurance company to keep their plan active. If you do not, then you might face many challenges that could make it harder and costlier to keep coverage in the future. Let’s look at some of the consequences that a failure to pay might bring, and what you can do to avoid this risk.

Penalty 1: Higher Insurance Premiums

If you rack up a reputation of not paying your premiums on time, then the punishment is not likely to make that any easier. Insurers tend to view unreliable customers as higher risks to insure. Therefore, they might increase your policy’s premium the next time you try to renew your plan. If you are having a tough time paying now, then you are likely to make it tougher on yourself in the future. Always talk to your agent if you feel you need cost help.

Penalty 2: Termination of Benefits

Like with your electricity, water or other subscription services, non-payment of your auto insurance premium will usually result in cancellation. Your insurer will have to let you know if this is going to happen, but you still must start to pay if you want to keep your benefits.

Additionally, if you have been notoriously unreliable in paying your bills, then your auto insurer might be able to refuse to renew your policy. Any lapses in coverage could raise your risk rating, making it both harder and more expensive for you to get a new plan.

Penalty 3: Credit Problems

A failure to pay your bills could lower your credit score. This could cause financial challenges, and it could even increase your auto insurance premiums in the future. Many insurers look at your credit score when figuring out your risk rating. A lower credit score could equal a higher premium.

Nevertheless, most insurers supply solutions that can help clients keep their payments current and affordable. You might be able to sign up for automatic payments or EFTs, or pay your premiums in full at the start of your policy term. Either option will lower your risk of ever missing a payment. Plus, some insurers even offer discounts to policyholders who choose one of these convenient options.