What Is A Grace Period?

​It is common for insurance policies to have a grace period after the premium is due, during which the policyholder can pay the premium without losing coverage. The grace period for paying an insurance premium can change based on the company and the policy.

The grace period may be as small as 24 hours or 30 days, depending on the insurance plan. The insurance policy contract will specify the length of any grace period that may be included. 

How Does a Grace Period Work?
If a policyholder is late in paying their premium, a grace period ensures they will not instantly lose coverage. Each state determines its insurance grace period regulations, including the minimum required duration for each coverage type.

If your insurance policy is terminated for nonpayment, it will not pay out under any circumstances, and you will likely have to reapply for coverage.

Why You Shouldn't Always Rely on Grace Periods 
Grace periods are not intended to be used to make late payments routinely but as a safety net in the event of an oversight. If you have a history of using it inappropriately, your insurance company may raise your rates or drop your coverage altogether. 

Furthermore, if your insurance policy is terminated for any reason, it may be more challenging for you to obtain coverage in the future. Even if you do find insurance willing to deal with you, there is a good likelihood that you will be charged exorbitant rates for inadequate protection.

Conclusion
Grace periods are a beneficial tool that helps prevent simple mistakes from turning into painful and expensive coverage gaps. When purchasing insurance for your company, it is in your best interest to have a solid understanding of the specifics of your policy and the boundaries of the protection it provides.

At Appletree Insurance, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (603) 881-9900 or Click Here to request a free quote. Topics and coverage discussed in this article are not guaranteed, consult with your agents to determine what your policy does and does not cover. We are more than happy to help!