Missing a payment on your insurance premium can get you into steep trouble. Even if accidental, delinquency can lead to consequences.
- Policy Cancellation: After weeks of non-payment, expect to receive a notice of cancellation. Such a letter gives you a period to catch up on payments before losing your policy.
- Premium Increase: Insurers may consider you high risk if you demonstrate financial unreliability. In effect, you will pay more per year for coverage.
- Loss of Privileges: The payment terms of your premium may change after non-payment. In particular, you may lose the right to pay monthly. Instead, you will need to buy your annual premium up-front on its renewal date.
Because life happens, the scenarios above do not always apply. If you changed bank accounts or forgot about the bill, you might receive a small fee, but the matter ends there. When you repeatedly miss payments, that’s when you jeopardise your existing policy.
How to Avoid Non-Payment
If you’re experiencing financial stress, speak with your broker. Transparency allows your provider to recommend ways to cope with, reduce or budget more effectively for your premium.
When setup for automatic withdrawals, you may want to protect yourself from insufficient funds. You can do this with overdraft protection. Although debt, it keeps your account from declining transactions with a negative balance. If between cheques or short on cash, overdraft prevents non-payment.
Non-Payments Do Not Disappear
If the insurer cancels your policy, it does not exempt you from paying backlog. Any amount owing still belongs to the insurer. Thus, switching companies won’t leave that debt behind. If you continue not to pay, other insurers might disqualify you. As well, collection agencies will start to harass you.