Late bill payments are never a good habit. Missing premium insurance payments can result in your policy being cancelled and end up being a costly error in the end. As with other unpaid debts, insurance companies can also send your arrears to a collections agency.
In the article below, we will discuss the implications that missed payments have on your insurance policies and what the impact is of having your arrears sent to collections.
What Happens When You Miss Your Insurance Payments
If you have missed a payment on your home or auto insurance policy, it is essential that you handle the situation in a timely manner. In some circumstances, where automatic bank withdrawals have been dishonored by the bank, additional non-sufficient fund charges would have to be paid.
If an insurance company has not received a response in regard to your missed payment, eventually this can result in your insurance policy being cancelled.
In Alberta, auto insurance is mandatory and if a driver has had their policy cancelled for non-payment and does not have another active insurance policy, driving without insurance is illegal and a punishable offense. Although home insurance is not mandatory, when faced with a cancelled policy and a lapse in coverage, your biggest asset is suddenly not insured.
The Collections Process
If your insurance company has been unable to successfully collect the funds owing to them, they may send your account to collections. A collections agency is a business which intervenes to recover money owed by individuals. If you have received notice that your past due account has been sent to a collections agency, you will now be responsible to settle the debt with the collections agency and not the insurance company. If possible, make the payment in full as soon as you can and if you are unable to pay the amount at once, negotiate a payment plan and request a copy in writing.
Another common practice with collection agencies is to list your unpaid account on your credit report. This can negatively impact your future credit score and can remain on your credit record for several years.
Tips to Help make Insurance Payments on Time
To avoid late insurance payments, there are some helpful tips which you can follow:
- If you are unable to pay an annual lump sum amount, request a monthly payment plan.
- Set up payment reminders on your smartphone calendar or email to ensure that you make your payment on-time.
- Set up automatic withdrawals from your bank.
- Make sure to always have a buffer in your account to ensure you have sufficient funds for scheduled auto payments.
- Arrange with the bank to have an overdraft protection on your account.
To get a free, no-obligation quote, contact one of our knowledgeable insurance specialists today.