Just like most other services, missing an insurance premium payment can lead to the cancellation of your insurance.
What’s more, once you have been cancelled by an insurance company for missing a payment, when you reinstate your policy, your rates are surely to increase.
It is very important for all policyholders to understand the importance of paying your insurance premium on time and to contact your broker immediately should you realize you are behind in your payments.
Most insurance companies are unwilling to insure policyholders who have been cancelled because of a non-payment.
Strategies to Avoid Cancellations
Pay Up-Front: Not only will paying your insurance policy up-front help avoid cancellations for non-payments, it will also help you eliminate the added fees that come with monthly payments.
Use a Savings Account: Having a few thousand dollars up-front may not be realistic for some policyholders. Therefore, working with a financial advisor to set up automatic transfers of funds to a savings account will help you stay on budget. This can be used to save up the necessary funds for paying your insurance premiums in up-front in full.
Automatic credit card payment: Many insurance companies offer monthly credit-card payments. Although this may not be the most financially sound method, as long as your credit card is up-to-date with the insurance company, this will help avoid cancellation.