Missed payments are not in and of themselves a rating factor for insurance, but if you fall behind by more than a month, that could lead to you being cancelled, and that will definitely affect your future insurance rates.
Sometimes in life, you can hit a rough patch, lose your job, need to take a leave due to an injury or illness or because a loved one is sick and you need to take care of them. You can also find yourself with higher than expected expenses in a given month. Maybe you had a big expenditure like a vacation, or needed to replace your roof. It’s not unusual to find yourself short of money from time to time, and sometimes that can mean missing an insurance payment.
Hey, it happens. If you’re late on a payment, or your insurer tries to withdraw funds from your account and there’s not enough money in there to cover your monthly installment, it’s not the end of the world. Depending on your bank, they may charge you an NSF fee. As for your insurer, they should notify you if you are late on a payment. If that happens, it’s very important that you take it very seriously, and take steps right away to rectify the situation.
When your insurer notifies you that your payment is late, they will provide instructions on how to make a payment, and a deadline, usually between two weeks to a month from the original payment date. Don’t ignore the deadline. If you miss it, then your insurer can cancel your policy for non-payment. If your insurer decides to cancel your coverage, they are required to send you a warning by registered mail, and give you 15 days to pay. If those 15 days come and go and your coverage is cancelled, that is a permanent mark on your insurance record, and means that you will be considered a high-risk driver by most insurers. Even if there’s not much of a gap in your insurance, your rates could triple and might not come down for many years afterward.
If your vehicle is leased or financed, it can be repossessed by the lessor/lienholder if the insurance is cancelled and not replaced with a new policy. Insurance is a condition of the finance/lease agreement.
After a policy cancels for non-payment there is usually a balance left outstanding. The cancellation goes on your record even if the balance gets paid at a later date.
Insurance companies usually try once (maybe twice) to collect the outstanding balance and if not received, it goes to collections. This can affect your credit.
The best strategy is to always make your payments on time. If you think that there’s a chance that you could miss a payment, try one of the following to keep your payments up-to-date and your insurance record clean:
Perhaps the best way to avoid missing insurance payments is to shop around for a monthly insurance rate that is easier on your pocketbook. Mitchell & Whale works with 40+ different insurance companies, so if you call us, it’s likely we’ll be able to find you a great rate that fits within your budget.
Adam clarifies when missing a monthly premium payment can lead to an increase in your future premiums.
Want to add to this story? Let us know in comments below! Mitchell & Whale is a fast-growing insurance brokerage in Ontario, striving to make insurance _not suck_ one customer at a time. Give us a call today to discuss any of your insurance needs at 1.800.731.2228.