Individuals get to choose their insurance company. Once they do, then the payment arrangements become part of the contract.
Every insurance company will deal with this in a different manner. Most offer different types of payment options. Some will insist on full payment for the year. Many others will have a quarterly payment plan or even allow for monthly payments. The insured must honour the payments. As per the agreement. On time payments are part of the agreement.
What Happens If Your Car Insurance Payment Is Late?
Circumstances can arise where an individual can forget to make their car payment. As soon as it is realized immediate payment is necessary. Notices about this need addressing quickly.
The insurance company will not immediately cancel the insurance. They will not do this without first notifying the insured. They will send a notice that they have not received payment. If this is a first-time occurrence, they are usually forgiving about this matter. But correcting it is a priority.
The insurance company issues statements based on the payment plan as a rule. They often do this with enough time for the individual to be aware and to plan for the payment. If an individual makes a habit of making late payments, this can become more of a serious problem.
The insurance company will make a note of this. It could affect the premiums upon renewal. It could also cause the insurance company not to renew the policy at renewal time.
What Is The Grace Period For Paying Your Car Insurance?
In most cases, there will be a grace period for the late payment. It gives the insured a chance to pay. As a rule, this will be 15 days. If the insurance is not paid within this, then there is a high risk of cancellation of the policy. As mentioned even if the payments made in 15 days there can be repercussions. It is if this happens too often. Keep in mind that along with making up the late payments there may also be fees involved as well.
If the payment has been late because of non-sufficient funds the bank will also levy a charge for this. Plus the insurance company may have a late fee as well. They will expect this a late fee payment along with the missed payment
What Happens If They Cancel Your Insurance?
Most likely insurance cancellation will take place. If the insured neglects to pay the late payment within 15 days. Some insured feel that all they need to do is just go to another insurance company. It does not work this way. Most insurance companies are aware of the actions that have taken place with the other company. The late payments will be evident to them. The new company is not likely to take on this individual with a track record of late payments.
Even if it there is only the one late payment that exists there is still an issue. The outstanding bill requires payment. Before the new insurance company will take on the individual for insurance.
Payment is due to the previous insurance company. It is a protection that is in place so individuals cannot hop from one insurance company to another. They cannot neglect to pay their insurance as they agreed to.
Quite often the insurance company will reinstate the insurance. Even if a cancellation has taken place. But they will as a rule only do this if this has just been an incident that has happened on the rare occasion.
Individuals have to be well aware that they are creating a record of late payments. It is detrimental to their insurance in the future. It could be that the existing insurance company will raise the premiums because of this. If one goes to another insurance company, they may still give the insurance. But the premiums will be higher. Either way, this is detrimental to the insured.
How To Avoid Late Payments
There can be different reasons why a payment has become late. It could be an oversight where one has forgotten that the insurance is due. It can happen when the payments are made in quarterly instalments. But, the insurance company would have sent out an invoice. Giving the insured plenty of notice that the payment was going to be due. On other occasions, it could be that the individual has forgotten to send in the payment. Often this happens if they are making monthly payments. A short-term unforeseen financial situation could’ve arisen. A circumstance has caused them to be a few days late.
Automatic Bank Payments
There are some that have automatic withdrawals from their bank. They may neglect to get the insurance payment money in on time.
The insured has a responsibility. It is to take every step possible to make sure that their insurer’s payments arrive on time. One way of being able to do this is by arranging for automatic withdrawal. It works if the payments are on a monthly basis. Then it is just a matter of making sure that the money is in the bank on the due date. Some individuals arrange for overdraft protection at their bank. By doing this, it means that the insurance payment is covered. Even if there have been no funds put into the account. Then it is just a matter of the insured depositing the money to cover the overdraft.
Lump Sum Payment
An even better way of ensuring that late payments are not going to exist is by paying the insurance in one lump sum. By doing this, the insurance for the year has been taken care of. When the policy is due for renewal the insurance company will contact the insured. It gives them enough time to plan for the next year’s payment. That is if the insured is going to renew the policy. Also, that is if there are no reasons existing why the insurance company would not renew.
It is mandatory to have insurance in Canada for drivers. For those that cannot afford it, they can take it just the basic mandatory insurance. It means the premiums that will be low. But, they do have the responsibility of making sure that there is insurance on the car. They are taking the risk of losing their insurance. If they form a habit of making late payments to the insurance company.