How a Missed Payment Can Impact your Insurance

By: Newman Insurance
September 24, 2020

We’ve all missed paying a bill at least once when we either put it aside and forgot, changed our banking details and didn’t notify the company, or simply due to bad timing. Unfortunately, the current pandemic has added an extra layer of anxiety on families struggling to pay their bills when family members have lost their jobs or when family incomes have been reduced.

While missing a payment with your cable or internet provider may not have any major repercussions, a non-payment cancellation on your insurance policy can hit you hard in the wallet.

While each insurance company has their own set of rules on the types of business they will accept, a non-payment cancellation can limit the number of companies, and when combined with a conviction or accident, it can become difficult to find affordable insurance. 

Monthly Banking

The majority of our clients choose a monthly payment plan in order to spread the premium over 12 months. A monthly plan also eliminates the chance of forgotten payments as the plan continues with each renewal.

If a monthly debit is returned by a bank due to non-sufficient funds, the insurance company may attempt a second debit usually within five days. If this debit is successful, the policy will remain in force without a penalty. If the second attempt is returned as well, the policy will be cancelled for non-payment and a registered letter is mailed to the client.

How to Prevent a Non-Payment Cancellation

There are many things you can do to avoid a missed payment or a returned monthly debit.

  • Avoid purchasing insurance if you know you can’t afford to pay for it.
  • Consider increasing the policy deductibles to lower the premium. 
  • Ensure there is always sufficient funds in your bank account to cover payments.
  • For extra security, ask your financial institution to add overdraft protection to your account.
  • If you can’t afford your automobile insurance, consider parking your vehicle and/or removing some of the road coverage.

If you have any payment or billing questions, please contact us today.

The content in this article is for information purposes only and is not intended to be relied upon as professional or expert advice.