Did you know that missing a payment on your insurance policy can have lasting impacts that can extend past a cancellation of your insurance?
What is an insurance cancellation for non-payment?
If you miss a payment with your insurance company, typically they will attempt to re-collect those funds a few days later. If the payment still does not go through, then a letter is usually sent advising the date you need to pay by to ensure your coverage remains in force. If you do not pay by this date, and your policy is cancelled it is considered a cancellation for non-payment. This is true even if you pay the balance later.
How does an insurance cancellation for non-payment impact consumers?
A cancellation for non-payment can impact your Autoplus record for up to 3 years, not only can no other insurer set you up with a policy until the previous balance is paid, but you also may find it extremely difficult to find a payment plan until the 3 year window has passed. This means you would need to pay the cost of your insurance up front.
If you end up with more than one cancellation for non-payment within the 3 years, it’s even less likely you will be able to find a payment plan. This is important for people who have more than one policy in force that could be impacted by a missed payment, such as a vehicle policy and a motorcycle policy.
Furthermore, some companies are even declining collision coverage on vehicles for insureds who have a cancellation on their record. Without full coverage on your car insurance policy, you will have a difficult time purchasing a vehicle with a lienholder as they require full coverage.
What can you do if you miss and insurance payment?
If you think that you may miss a payment, whether you have lost your job or just had some bad luck, we recommend you contact your broker to advise the company ahead of the withdrawal being returned NSF. Being proactive can help insurance companies be more likely to help you make payment arrangements. Sometimes the insurance company can even move your withdrawal forward to help you make ends meet! If there is no way you will be able to continue paying for your insurance, please request to either reduce coverage or cancel the policy before you have missed a payment to avoid having a cancellation show on your record.
Here are some tips to help avoid missed payments:
- Choose a payment date that aligns with your paycheques
- If the payment date doesn’t align, set money aside when you’re paid for important withdrawls so you don’t need to worry about them being returned NSF
- Set up reminders in your calendar for important withdrawals
- Check your account regularly in case an unexpected payment (ex. An annual automatic subscription) was removed that will depleate your funds.
If you know you’ll miss a payment, be proactive and contact the company or your Alberta Insurance broker to see if you can move the payment date.